Islamabad August 21 2021: Oil and Gas Regulatory Authority (OGRA) has reduced Return On Asset and Deprecation Rate for Sui Northern Gas Pipeline Limited (SNGPL) for the fiscal year 2021-2022.
While determining the SNGPL petition for Revenue Requirement for Fiscal Year 2021-22, OGRA, in its decision dated August 17, 2021 has in line with the tariff regime in vogue, reworked the Rate of Return on Average Net Assets (ROA) for the year 2021-22 at 16.60 percent as compared to the previous ROA rate of 17.43 percent determined up to 2020-21. Reduction in net rate of return will likely to have a negative impact on the profitability of the Company for FY 2021-22.
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At the same time, OGRA has also advised the reduction in depreciation rates of the various operating assets particularly transmission and distribution network of the company from present rates of nearly 6 percent per annum to rates ranging from 2.5 percent to 5 percent per annum. This will result into increase in asset base of the Company and higher amount of returns over a longer period of time and consequently will have a positive impact on the profitability of the Company.
While the change in rate of depreciation would have a long term impact on the asset base and profitability of the Company, the net adverse impact on the profitability of FY 2021-22 due to reduction of rate is estimated to be PKR 400 Million, as per the management.