Dar asks Ogra to plan RLNG tariff cut by $2 per mmBtu

ISLAMABAD: The task force on gas-related issues headed by Deputy Prime Minister Senator Ishaq Dar here on Monday asked the relevant authorities to start work on reducing the margins, taxes, duties and port charges on imported gas—LNG by 50 percent so that the price of re-gasified LNG could be made acceptable to its consumers.

This would help consume the RLNG both in the power and industrial sectors, a senior official who was a part of the meeting told The News. It was figured out, the official explained, in the meeting that the landed cost of LNG stands at $10 per mmBtu, but when it reaches the consumers, its prices go up by $4 to $14 per mmBtu mainly because of the port charges, duties, margins of PSO, Sui Southern, Sui Northern and Pakistan LNG Limited (PLL) and UFG cost at higher side.

In the meeting, the chair asked Ogra chairman to look into the matter and sit with petroleum division officials and reduce the taxes, duties, port charges, margins and UFG cost by 50 percent from $4 to $2 per mmBtu which would help tumble the RLNG prices affordable for the consumers and this is how the LNG usage would start getting the momentum. The official said that port charges being collected by Port the Port Qasim Authority from LNG ships, are the highest in the region causing the increase in the price of the delivered RLNG to the consumers. “However, the taxes are the prerogative of the policy makers in the central government which does not fall in the domain of the Ogra.”

However, the federal government collects $3.1985 per mmBtu (19.35% of the total LNG tariff) in the form of advance income tax of $0.1278 per mmBtu which is $0.77%, GST on RLNG price is $2.5209 per mmBtu (15.25%), Customs Duty $0.5141 per mmBtu (3.11%) and Federal Excise Duty (FED) $0.0357 per mmBtu (0.22%).

In addition, port charges borne by supplier stand at $0.1156 per mmBtu and borne by customer (PSO or PLL) $0.522 per mmBtu, PQA Wharfage is $0.0156 per mmBtu, LNG measurement cost is $0.0002 per mmBtu and clearing agent cost 0.0012 per mmBtu, LC charges $0.0012 per mmBtu.

Sindh Infrastructure cess $0.1285 per mmBtu, retainage $0.0768 per mmBtu and terminal plus utilization charges stand at $0.5043 per mmBtu. Terminal management fee stands at $0.0250 per mmBtu, LNG import margin $0.1267 per mmBtu, cost of supply by SNGPL $0.2874 per mmBtu and by SSGC $0.2055 per mmBtu. SNGPL also charges from the end consumers of RLNG the loss of transmission at 0.36 percent and distribution loss at 7.66 percent.

More importantly, the LNG diversion cost to the fertilizer sector is also charged from the RLNG consumers in the RLNG tariff determined by Ogra. The supply of RLNG by SNGPL and SSGC to the consumers is being provided on a provisional basis, not on actual basis. In the RLNG tariff for end consumers, LSA management fee of $0.0250 is also being charged which should have been only for one time.