Domestic sector to get 19 LNG cargoes of Rs232bn

ISLAMABAD: The Petroleum Division’s top mandarins have taken a serious notice of massive diversion of RLNG to the domestic sector and asked the Sui Southern and Sui Northern gas companies to limit their diversion in such a way that it would not cause a massive increase in the overall gas prices and its cost could also be recovered easily.

“This time 19 LNG cargoes of Rs232 billion are estimated to be delivered to the domestic sector. However, after June 2024, the actual reconciled figures about RLNG diversion will surface. We are estimating that the RLNG cost would be hovering somewhere at Rs180 billion,” senior officials of the Energy Ministry told The News.

The Petroleum Division mandarins are seriously thinking of capping the RLNG diversion to the domestic sector. The official said the RLNG cost of Rs232 billion, estimated to be incurred on RLNG diversion from November 2023 to March 2024, was expected to be recovered from the domestic sector through the enforcement of limited WACOG (weighted average cost of gas) mode and two times hike in gas prices -- from November 1, 2023 and February 1, 2024.

However, the cost of RLNG diversion of Rs250 billion to the domestic sector during the period from FY19 to FY22 has not been recovered so far and it has become a part of the circular debt of Rs2.9 trillion.

Officials said out of Rs2.9 trillion circular debt, Rs1 trillion had been added just because of no increase in gas prices in the last 10 years.

“Ogra used to give determinations but the government avoided an increase in gas tariff and because of this very fact, Rs1 trillion has been added to the circular debt.”

On the issue of LNG transactions, the government is bound to pay the LNG cargo cost within 10 days after it is offloaded, but one month is consumed by the gas companies in the billing process, another 10 days are consumed in recovery of bills and 5-10 days are used in reconciling the bills.

The whole process consumes 50-60 days. When the recovery of gas bills takes place in 60 days, 6 cargoes are offloaded. So the government wants to cap the RLNG diversion limit to the domestic sector apart from improving the bill recovery.

Right now, there is a gap of 60 days between recovery and payment cycles, which haunts the government functionaries. The government wants the gas companies to borrow the working capital till the recovery of bills to pay off the LNG cargoes’ cost.