With the end of the monopolies of the two gas companies – Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited – the Oil and Gas Regulatory Authority (OGRA) urged public officials and the government to develop policy guidelines for development and expansion based on national grid competition and new residential gas connections.
“Please be aware that the exclusivity of the gas firms to operate in franchise regions is no longer legitimate, and thus new development plans are to be given on a competitive basis,” Ogra wrote to the Standing Committee on Energy of the National Assembly (Petroleum Division).
The exclusivity of SNGPL and SSGC is said to have ended approximately ten years ago.
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In the letter, which was also sent to the Attorney General, the Ministries of Energy, Law, and Justice, and Planning and Development, the NA Speaker, and various stakeholders, Ogra demanded that gas companies be required to complete development plans. already approved network and new gas connections financed by consumers through tariffs, rather than putting pressure on the regulator.
In addition, the regulator stated that the federal cabinet authorized its subcommittee to approve new gas schemes and 300 consumer applications per village or new location covered by the gas development scheme area compared to the savings available with the gas utilities in previous schemes commissioned after April 13, 2021.
Along with a five-year track record, Ogra revealed to the chairman of the NA Standing Committee on Energy that SNGPL’s performance versus target in terms of a development plan and new gas connections was 67% and 77%, respectively.
Ogra said that it was required by law to establish the yearly revenue need to arrive at prescribed consumer prices for each year, which was the total of the company’s operational expenses, return on fixed assets, and so on. The regulator stated that it had a legal obligation to properly analyze each company’s claim based on prudence and reason to approve only justifiable spending.
It claimed that SNGPL was conveying the impression that new and current gas development projects could not be carried out until the following year’s budget was authorized by Ogra. “The budget of gas companies and the priority of specific projects of the constituency are chosen by appropriate management and boards [of directors of gas firms].” As a result, there is no reason for abandoning projects after receiving all necessary permissions and funding,” Ogra stated.