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Thursday March 28, 2024

Ogra may announce RLNG sale price by Friday

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) is most likely to announce the provisional RLNG sale price by coming Thursday or Friday enabling the government to carve out the sustainable payment mechanism. The government is eying to ink deal with Qatar on LNG for 15 years by mid of

By Khalid Mustafa
October 06, 2015
ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) is most likely to announce the provisional RLNG sale price by coming Thursday or Friday enabling the government to carve out the sustainable payment mechanism.
The government is eying to ink deal with Qatar on LNG for 15 years by mid of the current month.
The Ogra chairman, Saeed Ahmad Khan, when contacted said that the regulator has got the SRO from the government vetted by Law Division empowering it to determine the provisional LNG sale price by treating the LNG as petroleum product.
“The ministry of petroleum and natural resources, PSO, Sui Southern and Sui Northern have provided all the required documents and Ogra has been working for determining the LNG sale price.”
The finance department of the regulator, he said, is currently working on the subject and is in the process of hammering out at least three scenarios about LNG sale price after which the three-member authority of Ogra would examine the three scenarios and approve the one which is the most rational, logical and practical for provisional LNG price.
“Keeping in view the urgency of the issue, I have suspended leaves of the said department officials so that they could focus on determining the provincial price and then Ogra will hopefully be able to announce it on the coming Thursday or Friday,” he said.
The sources in the regulator said that there is a tremendous pressure on behalf of the ministry preventing the Ogra from reducing the margins of PSO, Sui Southern and Sui Northern to a large extent pleading that the state owned companies will suffer the most as they are already on the verge of economic collapse.
When contacted federal Minister for Petroleum and natural resources Shahid Khaqan Abbasi said: “We just have asked Ogra not to slash down the margin of PSO which is at 4 percent arguing that it gets the 4 percent margin on import of oil. Since LNG price is linked with Brent so Ogra should let PSO charge 4 percent margin on LNG.”
The minister said it is up to Ogra what decision it takes as there is no pressure from the government side on this issue. The minister also denied any pressure for not curtailing the margins of Sui Southern and Sui Northern to a large extent.
The official sources are of the view that in case the margins of the three entities are rationalized, the RLNG cost for end consumers will come down by $1.25-1.50 per MMBT which will provide reasonable solace to the consumers of RLNG. The Pakistan State Oil is currently charging 4 percent margin, which may be reduced up to 2 percent. Similarly, Sui Northern is charging transmission and distribution charges of 52 cents on 1 MMBTU RLNG and Sui Southern 28 cents.
Both are also charging 5 cents each as administrative charges. On top of that LNG terminal is charging $1.85 per MMBTU as tolling fee. the official said that the Sui Northern is charging the UFG (unaccounted for gas) of 0.5 percent on transmission lines and 11 percent on distribution lines from power sector. The official said that from CNG sector, Sui Northern is charging 11.50 percent UFG. The official said that from CNG sector Sui Northern is charging 90 cents as transmission and distribution charges or operational charges and sui Southern 28 cents and PSO 40 cents per MMBTU as margin on RLNG for CNG sector.
However, Ogra chairman said that the regulator will first announce the provincial LNG sale price for enabling the government to carve out the pay mechanism which is imperative for LNG deal with Qatar and then it will hold the public hearing to announce the proper RLNG price.
The huge amount of over Rs 20 billion, the official sources said, power sector owes to pay to PSO in the head of RLNG. Once the provisional RLNG sale price is announced, power sector will pay the said amount to PSO after the billing is made for the RLNG used for electric power generation. If the LNG price gets notified, then ministries of water and power, petroleum and natural resources will finalize the sustainable payment mechanism with the help of finance ministry.
Moreover, the issue of opening of stand by letter of credit with guarantees from finance ministry will also be resolved.
When contacted Federal Minister Shahid Khaqan Abbasi confirmed that the LNG deal has been finalized, but there are some issues left to be resolved for the LNG supply from Qatar.
He said: “We are vigorously working to fulfill the two conditions within the span of current months as Ogra is hoped to come up with LNG sale price within days.
Mr Abbasi also claimed that Qatar has never extended the facility of price opener clause to any country in LNG deal before and this is Pakistan which has managed to get this facility.