Inflated bills

There has been some movement on the issue of the inflated gas bills consumers have been getting for the last two months. The report of the fact-finding committee on inflated gas bills confirms that a number of consumers received gas bills inflated by 200-300 percent. As we have also observed before, the fact finding committee confirmed that this was not an issue of overbilling. Instead, it was the logical culmination of the PTI government’s decision to increase gas tariffs by 10 to 143 percent for domestic consumers. As a result, at least 47,000 Sui Northern consumers received bills that were 200-300 percent more than their corresponding bills last year. There is little clarity still over why the increase in bills has been twice as high as the rate hike in some cases. The reason seems to be the application of the ‘pressure factor,’ which was also added to the billing calculations. The committee found that one out of four consumers faced an additional gas bill hike due to the application of the pressure factor.

The government is unlikely to take responsibility for this debacle, and seems to be moving to the appearance that the gas price hike was someone else’s fault – when it was the government itself that had approved the controversial switch to the seven-slab gas pricing formula. The fact-finding committee is now recommending reversing the move by returning to a five-slab structure and reducing the tariffs. What it necessary is that the committee undertake an impartial assessment of the government’s decision to spike gas tariffs. Was there enough justification to merit the kind of gas tariff hike the government undertook? Did the government build in new hidden mechanisms, such as the pressure factor, to increase gas tariffs even further?

It would appear that either the old gas tariff structure, under which SNGPL and SSGC were making healthy profits, was a complete joke – or the government has been taken for a ride by the IMF and gas sector bureaucracy. Either way, this creates an impression of incompetence. If the gas tariff was necessary, then the government needs to stand by its original, unpopular decision. If it was not, then there can be no excuses for causing so much suffering to the public due to a snap decision. Perhaps the government will now bring back the old slabs. The range of gas prices right now is such that consumers in the lowest slab pay around Rs127 per MMBTU while the highest slab pays Rs1,460 per MMBTU. The highest rate is almost 11 times the lowest one. This, in itself, is a ridiculous situation. The trouble is that the fact-finding committee seems to be downplaying the gas price hike by claiming only around 47,000 out of the 6.7 million customer base. The issue of gas pricing is far more severe. The formal detailed report of the fact-finding committee will make for interesting reading.