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  • Determination SNGPL 2015 16 Motion For Review Against Err Dated April 14 2016

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    Azhar Rana
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    Determination SNGPL 2015 16 Motion For Review Against Err Dated April 14 2016

    Uploaded by

    Azhar Rana

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    OIL & Gas REGULATORY AUTHORITY SS OGRA-6(2}1(1)2016-Review IN THE MATTER oF SUI NORTHERN GAs PIPELINES LIMITED (SNGPL) MOTION FOR REVIEW AGAINST. AUTHORITY'S DETERMINATION OF ESTIMATED REVENGE REQUIREMENT FOR FY 2015-16 UNDER O- AND GAS REGULATORY AUTHORITY ORDINANCE, 2002 & NATURAL GAS TARIFF RULES, 2002 DECISION APRIL 14,2016 Before:- Saeed Ahmad Khan, Chairman Aamir Nasim, Member (Gas) Noorul Haque, » Member (Finance) BACKGROUND... AUTHORITY'S JURISDICTION AND DETERMINATION PROCESS PROCEEDINGS... Reps DISCUSSION AND DECISION. ees pele cemrEOTRUECOPY ee thy pe Motion fr Review of Estimated Revenue Requient of SNGPL @® Honan anise 1. BACKGROUND 11. Sui Northern Gas Pipelines Limited (the petitioner) is a public limited ‘company incorporated in Pakistan, and is listed on Pakistan Stock Exchange. Its engaged in the business of construction and operation of gas transmission & distribution pipetnes, sale of natural gas and compressed ‘natural gas, and sale of gas condensate (as aby-produt). 12. The Authority, vide its decision dated December 18, 2015 had determined the Estimated Revenue Requirement of the petitioner for FY 2015-16 (the said year) at Rs. 251,073 million and shortfall at Rs. 46,794 million translating into increase of Rs, 10781 per MMBTU in the average prescribed price 13. Being aggrieved by this determination, the petitioner filed motion for review on January 18,2016, wherein it has challenged various capital and revenue cost components as under; (a) Addition in Assets Transmission 4) Distribution Development 9) Laying of Distribution Mains 1b) System Relubiltation fii) Measuring and Regulating Assets 4) Installation of new connections 5) Measuring & Regulating Regular Assets 10) Plant, Machinery & Equipment and other Assets ©) Phtand Minny Tels egapment 7 Ofc Eine ¢. My Computer Handaare and LT COPY 0) Addition Fist Assets PF. 20185 CERTIFIED TRUE 8) Phase-l (LNG Project) o thy ' 2asel__ “Moion for Review of Estimated Revenue Requirement of SNGAL Frac Voor 0156 (b) Transmission and Distribution Cost 4. Huma Resource (HR) Cost fi Repair & Maintenance {i Stationary, Telegram and Postage ‘Travelling Expense ©. Legal and Professional Charges Pi, Advertisement i Uniform & Protective Clothing’s vii, Security Expenses 1% Provision for doubt debts © Outstanding of al centers for Complaint Management Xt Contribution of ISGSL expenses li, Other Expenses M4 The Authority issued notice of pre-admision hearing on February 02, 2016 to the petitioner and the Federal Goverment. 2 AUTHORITY'S JURISDICTION AND DETEEMINATION PROCESS 21. The petitioner has invoked the jurisdiction ofthe Authority under Rule 16 of the NGT Rules, and Section 13 ofthe Oxlinance, ection 13 provides ‘he grounds on which a review petition can be filed, and is reproduced bolow:= “IsReview of Authority decision The Authority may review, fecind, ehunge, alter or wary any decision, o nay releat a0 spphcatcn fokove dviding tt i the event of «change in crcunslane, oe discovery of ecidence whch, int the apinion ofthe Authority, could het fire rensonabty been discovered atthe time of the decision, of (onthe egae fe tehearing) at the time ofthe orginal hearing if eonsdermtin ofthe Sls i icunstanceso of the nen evidence would materially alte the decision.” “sues brought forward by the petitioner must necessarily be ‘waluated with reference to the aforesaid Socton 13 of the Oninance and % least one of the two pre-conitions given therein refering to -- Peon ed _. Fis 3. PROCEEDINGS 3a, Review of Estimated Revenue Requtement of SNOFL ‘\ Preadimission hearing was held on February 11,2016 at Lahore, where {he pattioners team was led by Mr. Amer Tufa, Managing Director, The Petitioner was given full opportunity to present its motion for review. The Petitioner made submissions withthe help of mul-media presentation andl contended the merits of the case in detal as well, 4. DISCUSSION AND DECISION 4a au, Transmission The Petitioner has submitted that it i carying out large scale LNG ‘steucture development project for the augmentation of transmission System, which has boon duly approved by the Authority. The projet is ‘sing cated out in two phases, phase-t is near completion while the ‘work on phase-tI has already been commenced. The total cost of both Phases of the project amounts to approximately Rs.76- billion. ‘the Authority, howey °F continues to change its stance on the provision of ‘turn on ENG assets as it had earlier allowed the inclusion of the return on the project assets in the rate base in RERR 2011-12 and DERR 201415, hatin DERR 2015-16, ithas exclude project sets of Phase and If from, ‘he cate base stating that these may be finance through GIDC. Ithas been ‘wwestal that Phase and If of the LNG fnfastrcture development Project may be allowed inthe rate base ofthe ptitoner. ZL CERTIFI Hato Review of Estimated Revenue Requirement of NOP ® Fant Ver 20S S12 The Autoriy observes tat petitioner contention regening change in Authority stance on acount of retum on LNG assets is incorrect and Sevond fats keping in view Fedral Government decisions interme of SSesplaratory letters by MPENR and Ministry of Finance, MP&NR on Hine 2,205 informed that “COP shal provide required financing for inleraking LNG Infrastructure Projet (PhaxetD from GIDC to both te Ge CoMPtes 48 Per Provisions of GIDE Act, 2088" Subsaenty, MPSNR, vie islet sted 11 Septebe, 2015, conveyed the approva ns sono Cooiaton Commits EC) ofthe Cabinet garding Sate thet the Ministry of Fiance will provide GOP guarante in favour OF Gos Companies to arrange financing for LNG Project (Phase-1) from Commercial banks, Thereafter MPNR Febuary 10 2016 informed thet ECC of the Cabinet while considering a summary submit by this Mistry on the subject vide case No. ECC-6/2/2016 dated 2801.26 ppiored the Proposals contained in Pare of the said summary az under: - 9 BCE of ie Cabinet rofrns is enter deision mae vide ene Nozec. Jini paZ20's dated 03.03.2015 wherty gus coupunice ere alone te ‘arrange fonting amounting t Rs. 101 billion from coursed bac Instea of GIDE ‘hase on GoP guarte 1 OGRA is ats that subject projects ail be inc empanics subject to conliton Wat RLNG pricing fn the aset bse of gas ering fenced un at produced gus Oo a ete cation of RLNG instruct of mation inprtmee rae ats adnate expse a te nrenu apna af he ity commis. 413 The Authority in view of above, in principle agrees t alow the LNG POSS Inthe rate base under ring fence mechanism in the ight of EOC ‘ishlon dated February 102016, Accordingly, she petitioner i inc io ‘osu the sane in rate base in FRR for the sie year cla Moto or Review of Estimated Revenue Reguement of NGL Fuel Year 205-16 ne 42. All other Capital & Revenue Items (21 The Authority evaluated the petition at length and reviewed each cost Component contended therein. Authority ote that review on capital and ‘venue items has been claimed withoat addressing the observations ‘esorded by the Authority in DERR FY 2015-16, based on which the

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