Controversy Erupts Over Delayed OGRA Decision and SSGC’s Soaring Share Price

ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) is facing scrutiny due to a delayed decision regarding Sui Southern Gas Company’s (SSGC) revenue requirements for the fiscal year 2022-23. This delay has coincided with a dramatic increase in the company’s stock value, rising by 600%, which has prompted accusations of preferential treatment.

OGRA’s approval of the final revenue requirement (FRR) for SSGC occurred on October 1, 2024, significantly behind schedule. This delay has sparked considerable concern, especially in light of SSGC’s share price skyrocketing from Rs8 on October 21, 2024, to Rs42 by the start of January 2025.

The surge in stock value reportedly lacked significant company developments. The Pakistan Stock Exchange (PSX) took notice of this exceptional increase, issuing a notice on November 13, 2024, asking SSGC to explain any factors contributing to the surge.

SSGC’s Response and SNGPL’s Legal Challenge

SSGC, in its response dated November 15, 2024, stated that no substantial developments had caused the stock fluctuations, a claim that has been met with scepticism. Meanwhile, Sui Northern Gas Pipelines Limited (SNGPL) has filed a legal petition contesting OGRA’s FRR decision issued on June 27, 2024.

SNGPL is challenging OGRA’s methodology in calculating asset returns and human resource benchmark expenses, alleging partiality.

Further controversy arose when it was revealed that OGRA promptly released SNGPL’s FRR following approval but held back SSGC’s decision until after a news report on April 21, 2025. The FRR was then posted on OGRA’s website the following day, heightening suspicions of a deliberate cover-up.

When approving SSGC’s FRR for 2022-23, OGRA allocated Rs19,659 million for the company’s human resource benchmark, surpassing SSGC’s own request of Rs19,568 million by Rs91 million.

Conversely, SNGPL’s request for an HR benchmark was completely denied. OGRA also granted SSGC a 50% Consumer Price Index (CPI) allowance, while SNGPL, a profitable entity, only received a 25% allowance.

Furthermore, OGRA’s choice to incorporate fixed charges into SSGC’s profit—typically used to address circular debt in the gas sector—has amplified claims that the regulator’s actions hinder the government’s efforts to decrease the energy sector’s growing debt.

Adding to the complexity, SNGPL has lodged a formal complaint against OGRA’s FRR decision for the fiscal year 2022-23, asserting unjust handling.

The petition contests the regulator’s rulings on return on assets and HR benchmark costs. SNGPL contends that despite being significantly larger than SSGC, it has been subjected to biased treatment, pointing to higher per-consumer, per-kilometre, and per-unit sale costs compared to SSGC.

During a corporate briefing in December 2024, SSGC declared an unexpected gain of Rs1,474 million in its HR benchmark, while SNGPL reported a loss of Rs6 billion under the same category.

SNGPL’s legal challenge also emphasized the difference in CPI allowances, implying that OGRA’s decisions were excessively beneficial to SSGC.

OGRA has defended its conduct, dismissing the accusations as unfounded. An OGRA representative stated that the matter is currently under judicial review before the Lahore High Court (LHC) and refrained from commenting further on the active case.

Regarding the increase in SSGC’s share price, the regulator argued that the reported figures were greatly inflated and accused SNGPL of launching a campaign to sway OGRA’s forthcoming revenue determination for FY 2025-26.

In 2013, an inquiry into former OGRA chairman Tauqeer Sadiq revealed significant financial losses incurred to the national treasury under his leadership.

Sadiq faced accusations of unlawful appointments within OGRA, manipulating gas distribution companies’ share prices, increasing the benchmark for unaccounted-for-gas (UFG), and authorizing new CNG stations and relocating existing ones, resulting in an estimated Rs82 billion in losses to the national treasury.