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SSGC clarifies its position on tariff hike

KARACHI: The Sui Southern Gas Company (SSGC) considers its national duty to provide transparent information for the benefit of consumers and all other stakeholders, said official spokesman of SSGC. According to the spokesman, it would be pertinent to note that SSGC is governed under a pricing formula, which guarantees its return of 17 percent per annum on net operating fixed assets at written down value before financial charges and tax. In terms of this formula, SSGC is entitled to gross revenue of approximately Rs 5 billion per year. Based on this, the current gross return paid to SSGC on the gas supplied from its transmission and distribution system comes to about Rs 15/mmbtu, which after adjustment of financial charges and taxes is less than Rs 5/mmbtu, amongst the lowest transmission and distribution return paid to any gas transmission and distribution company in the world having a large pipeline network of more than 30,000 kms. It is to be understood that the current request for any increase in gas tariff is mainly due to the fact that the gas received by SSGC from gas producing companies is priced under a gas pricing formula, which is an arrangement between the Government of Pakistan, and the gas producing companies. Since these prices are mainly linked with international oil prices and are payable in US$, any increase in international prices and depreciation of the rupee results in increase in the cost of gas which has to be passed on to the end users. staff report

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