Gas Tariffs Dilemma: Legality of 'Fixed Charges' in Question
The Oil & Gas Regulatory Authority (OGRA) has belatedly announced the revised consumer-end gas prices, receiving approval from the Economic Coordination Committee (ECC) after a two-week delay. This move has stirred considerable discussion about the government's essential need to disclose the revised prices, albeit four months behind schedule due to IMF program commitments.
Business Recorder 
Despite the government's attempt to downplay the inflationary impact, particularly for majority natural gas consumers in the protected category, the reality is more complex. The introduction of protected slabs earlier in the year aimed to shield the bottom income quintiles from tariff hikes. Ironically, the protected category, particularly those in the lowest consumption brackets, now faces the highest percentage increase from the last revision.
For protected consumers, the minimum monthly bill (inclusive of GST) has surged to Rs646, a 2.5 times increase from the January 2023 revision. The real blow comes from the enigmatic "fixed charges," escalating from Rs10/month to Rs400/month. The effective tariff for 1 mmbtu in the protected category, excluding GST, is now Rs574. Unprotected consumers face an even steeper rise, with the first mmbtu in the lowest consumption slab costing Rs1370 due to fixed charges soaring from Rs460 to Rs1,000/month.
While acknowledging that pipeline gas prices in Pakistan have been historically low, there is a growing concern about the government's attempt to rectify this issue outside the bounds of the law. The Natural Gas Tariff Rules 2022 explicitly state that no licensee shall charge any fixed or variable amount in excess of the relevant determined, approved, modified, or revised amount by the authority (OGRA).
The government's imposition of fixed charges beyond OGRA's determination raises questions about the legality of such charges, particularly when OGRA's final determination did not include any mention of fixed charges. The increase disproportionately affects the protected and low-consumption slabs of the unprotected category, constituting over two-thirds of all consumers.
It is crucial to note that while the regulator continuously disallowed prior year's shortfalls, the government's failure to implement the WACOG bill is well-documented. Fixed charges and surpassing the determined revenue requirement by OGRA appear to be makeshift solutions to address these issues.
The questionable legality of fixed charges opens the door to potential legal challenges, emphasizing the importance of reforming the gas sector within the established rules. As the country faces broader governance challenges, adherence to regulatory frameworks becomes paramount.
