After six months, Ogra sets RLNG price at $8.6 per MMBTU

ISLAMABAD: Setting aside the pressure of the federal government, the Oil and Gas Regulatory Authority (Ogra) has determined the provisional RLNG sale price at $8.63372 per MMBTU without inclusion of the general sales tax (GST) by slicing down the margin of Pakistan State Oil (PSO) to just 1.82 percent from four percent and doing away with the administrative and services charges of both gas utilities. It took Ogra six months to take this decision.
The earlier RLNG price was at $12.30 per MMBTU for power and fertilisers sector and $11.50 per MMBTU for others. The decision will enable the government to carve out sustainable payment mechanism which is the condition precedents (CPs) for the LNG deal with Qatar for 15 years.
According to Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, the ministry wanted Ogra to let PSO charge four percent margins on RLNG arguing it collects the same volume of charges on import of fuel.
“Since the LNG is a petroleum product, do allow PSO to charge four percent margins,” the minister told The News the other day. However, Ogra showed defiance and reduced the margin of PSO to a large extent to 1.8 percent from four percent.
“Yes, we have just fixed the provisional LNG sale price and two hours ago sent a 12-page determination to the Ministry of Petroleum and Natural Resources,” Chairman of Ogra Ahmad Saeed Khan told The News.
He said that Ogra has determined the provisional RLNG sale price at $8.63372 per MMBTU with GST. Khan said that the authority has brought down the margins of PSO to 1.8 percent from four percent. Likewise, the regulator has erased administrative and service or operational charges of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Limited (SNGPL) forthwith, bringing down the LNG sale price to $8.63372 per MMBTU from $12.50 per MMBTU.
However, the final decision will be taken on margins and administrative and operational charges when the Ogra will hold a public hearing on the formal RLNG sale price. Officials in Ogra said that the regulator wanted to bring down the PSO margin to one percent but with consultation of the ministry it had reduced the margin to 1.8 percent. The official said that the retainage of three percent has been reduced to 0.75 percent and the LNG terminal handling fee would be at 66 cents per MMBTU. Before that, the LNG terminal was charging $1.85 per MMBTU. However, the landed LNG prices has been worked out at $7.75 per MMBTU.
Similarly, the SNGPL was earlier charging operational charges of 52 cents on 1 MMBTU RLNG and SSGC 28 cents. In addition both were charging$0.05 each as administrative charges. On top of that, the LNG terminal was charging $1.85 per MMBTU as tolling fee apart from the 3 percent as retaiange. Now the scene has completely changed.
The officials said that the Ogra has announced the RLNG sale price for the consumers which are transmission lines. However, the attribution charges have not been rationalised owing to which the CNG stations will be having less benefit out of the LNG sale price. When contacted, Chairman all Pakistan CNG Association Ghyaias Paracha termed the decision very good saying that with the implementation of the decision, masses will get mammoth solace as CNG price will be substantially reduced in Punjab.
Shahid Khaqan Abbasi said he did not see the summary of Ogra and will “let you know today (October 8)” when he was sent an SMS asking: “Is the ministry satisfied with the decision of Ogra with reduction of PSO margin to just 1.8 percent and erasing of administration and services charges of Sui Southern and Sui Northern?” However, PSO Chairman Imranul Haq Shaiekh opted not to respond to the question in the SMS asking: “Will PSO be able continue to import the LNG with reduction in its margin by more than 50 percent?”