PSO claims Rs28bln from SNGPL in LNG dues; circular debt feared to reignite power crisis

LAHORE: Sui Northern Gas Pipelines (SNGPL), the main supplier of re-gasified liquefied natural gas in the country, owes at least Rs28 billion to Pakistan State Oil (PSO) in LNG payment, it was learnt on Friday, fuelling a fear of energy crisis reemergence if gas supply is interrupted.

A document, available with The News, revealed that SNGPL purchased liquefied natural gas worth Rs424.85 billion from a key gas importer PSO till date and paid Rs401.22 billion, leaving a balance of Rs23.63 billion; of that Rs15.53 billion is already overdue. Outstanding payments come at around Rs28 billion with additions of other levies and surcharges.

A SNGPL’s spokesman said the gas utility is making best efforts to make timely payments and “all the amounts recovered from RLNG (re-gasified liquefied natural gas) consumers are paid to LNG suppliers”.

“We have yet to receive Rs16 billion from IPPs (independent power producers), GPPs (government power projects), fertiliser makers, CNG (compressed natural gas) stations and other industries,” the spokesman said. Of the total amount, Rs10 billion is stuck with IPPs and GPPs and six billion rupees are not paid by RLNG consumers due to tariff disputes in different courts.

“With the recovery of the amounts, payments to PSO will become smoother,” the spokesman added. “Gap in invoices and payments will be reduced to minimum by June.”

SNGPL has already sought assistance of ministry of energy to address its liquidity crunch.

Industry sources said LNG receivables need to be cleared through devising a mechanism to ensure cash flows. LNG imports, from March 2015, brought in a respite for a country facing a widening gap in demand and supply of gas that accounts for half of primary energy mix. Presently, Pakistan has two LNG terminals with a combined re-gasification capacity of 1.2 billion cubic feet per day against a gas shortfall of at least 2bcfd, which is expected to reach 3.9 bcfd within next two years.

Officials said SNGPL is not clearing late payment surcharges and making payments in 10 days. The gas utility has not provided stand by letter of credit (SBLC) despite having received them from IPPs. “The utility is recovering pipeline charges plus payments from consumers but burdening PSO by holding payments on various pretexts,” an official said, requesting anonymity. “It is the sole responsibility of SNGPL management to recover RLNG payments from consumers and pay outstanding amount to the importer/supplier.” The official said a mechanism should be adopted wherein LNG payment should be released within 10 days coupled with provision of SBLCs.

SNGPL’s spokesman said LNG supply agreement with PSO has long been pending. “SBLCs to PSO will be provided as per the terms of the agreements after their finalisation and execution,” the spokesman said. “Similar is the case with payment of late payment surcharge, which would only accrue and stand payable as per the terms of the agreement, which is yet to be executed.” The spokesman added that SNGPL has no obligation to post SBLCs and pay any late payment surcharge in absence of agreements.