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SSGC & SNGPL seeking tariff hike from 2HFY12 – Alfalah Securities Limited

Karachi: The Sui-Northern Gas Pipelines (SNGP) and Sui-Southern Gas Company (SSGC) are seeking a hike in gas tariff of PkR 54.42/mmbtu and PkR 21.95/mmbtu respectively from 2HFY12 on account of facing severe revenue shortfalls and to bring them to an optimum level.

According to Alfalah Securities Limited, SNGP is currently facing a shortfall of PkR 30.4 bn while SSGC is facing a shortfall of PkR 8.36bn and to overcome this shortfall, the companies have filed a petition with the Oil and Gas Regulatory Authority (OGRA) to increase gas tariff.

Previously on September 21 2011, the government had allowed SSGC to raise gas tariffs by PkR 12.64/mmbtu while it allowed SNGP to raise gas tariffs by PkR 5.46/mmbtu. Alfalah Securities expects a hike in gas tariffs would not bode well for sectors like fertilizers and power as gas being a major raw material for these sectors which would incur more cost of production, thus affecting their gross margins.

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