Revenue requirements of SSGC: Decision delayed by Ogra creates controversy
Ogra approved the final revenue requirement (FRR) for SSGC on October 1, 2024 – nearly a year after it was due. The delay has raised eyebrows, especially considering the subsequent rapid rise in SSGC's share price from Rs8 on October 21, 2024, to Rs42 by January 1, 2025.
The stock's dramatic spike was said to be with no significant corporate developments. This unprecedented surge in stock price did not go unnoticed by the Pakistan Stock Exchange (PSX), which on November 13, 2024, issued a notice regarding the unusual activity, asking SSGC to clarify any factors influencing the spike.
In its response on November 15, 2024, SSGC responded, claiming no material developments had contributed to the fluctuations in its stock, leaving market watchers sceptical.
Meanwhile, Sui Northern Gas Pipelines Limited (SNGPL) filed a writ petition against OGRA's FRR decision, dated June 27, 2024.
SNGPL challenged the regulator's methodology in calculating returns on assets and human resource benchmark costs, alleging bias. A copy of the petition is available with by Business Recorder.
The controversy deepened when it emerged that although Ogra published SNGPL's FRR soon after approval, it withheld SSGC's decision until after a news report by Business Recorder on April 21, 2025. The FRR was uploaded to OGRA's website the next day, fuelling suspicions of deliberate concealment.
In approving SSGC's FRR for 2022-23, Ogra allocated Rs19,659 million for the company's human resource (HR) benchmark – Rs91 million more than the Rs19,568 million SSGC itself had requested.
By contrast, SNGPL's HR benchmark request was entirely rejected. Ogra also approved a generous 50% allowance for the Consumer Price Index (CPI) for SSGC, while SNGPL, a profit-making entity, received only a 25% allowance.
Moreover, Ogra's decision to include fixed charges – typically levied to tackle circular debt in the gas sector – in SSGC's profit has further fuelled accusations that the regulator's actions undermine the government's efforts to curb mounting debt in the energy sector.
Adding fuel to the fire, SNGPL has filed a writ petition against Ogra's FRR decision for the fiscal year 2022-23, claiming unfair treatment.
The petition challenges the regulator's decision on the return on assets and HR benchmark costs. SNGPL argues that despite being three times larger than SSGC, it has been subject to biased treatment, citing higher per-consumer, per-kilometre, and per-unit sale costs imposed on SNGPL compared to SSGC.
In a December 2024 corporate briefing, SSGC reported a surprising Rs1,474 million gain in its HR benchmark, while SNGPL, by contrast, suffered a loss of Rs6 billion under the same head.
SNGPL's legal challenge also highlighted the disparity in CPI allowances, suggesting that OGRA's decisions were unduly favourable to SSGC.
Ogra, for its part, has defended its actions, dismissing the allegations as 'baseless.' A spokesperson for the OGRA stated that the matter was currently subjudice before the Lahore High Court (LHC), and it would refrain from commenting on the ongoing case.
With regard to the spike in SSGC's share price, the regulator claimed that the figures being circulated were 'significantly exaggerated,' accusing SNGPL of initiating a campaign to influence OGRA's upcoming revenue determination for FY 2025-26.
In 2013, an investigation focused on ex-OGRA chairman Tauqeer Sadiq, had revealed how OGRA under Sadiq's tenure had inflicted massive losses on the national kitty.
Sadiq was accused of making illegal appointments in Ogra; manipulating the share prices of gas distribution companies; increasing the benchmark of the unaccounted-for-gas (UFG); allowing new CNG stations and relocating existing filling stations which inflicted Rs82 billion losses to national exchequer.
Copyright Business Recorder, 2025
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