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February 14, 2019

Gas utilities to charge separate tariffs for RLNG


February 14, 2019

KARACHI: Gas utilities decided to charge different tariffs for re-gasified liquefied natural gas (RLNG) added with the system gas supply to the commercial and industrial consumers, officials said on Wednesday.

The officials said Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines (SNGPL) drafted separate contracts for RLNG as supplying RLNG without a firm contract is causing losses and complications.

“The management committee of SNGPL in an earlier meeting decided to regularise the enhanced loads of commercial/industrial consumers provided they are willing that enhanced loads to be billed to them at RLNG tariff,” an official said. SSGC has vetted the draft contract.

The draft of contract for the supply of RLNG for domestic use and draft of the supplement contract for charging of enhanced load by commercial/industrial consumers on RLNG tariff have been presented before the Oil and Gas Regulatory Authority (Ogra) for approval, which would enable the gas companies to charge enhanced load to consumers at RLNG tariff.

The draft of contract said the consumers would pay for all RLNG supplied by a company in accordance with the RLNG tariff as determined by Ogra. In addition to the price of RLNG, meter rent and security deposit, the consumer will also pay all taxes or charges levied upon RLNG sale, supply and distribution as well as any increase in the rate or charges of RLNG irrespective of the fact whether the same has been intimidated or not, it said.

The consumer will need to pay applicable charges as approved by Ogra towards testing the houseline before commissioning the RLNG supplies.

Gas companies said since RLNG inducted into the system is commingled with indigenous gas coming from different sources it will be indistinguishable from other gas already in the system.

Ogra set the RLNG price for consumers of SNGPL at $10.599/million metric British thermal unit (mmBtu) and for consumers of SSGC at $10.906/mmbtu for February.

Ogra said gas shortage in the country is expected to reach four billion cubic feet/day (bcfd), almost equal to current total supplies, in two years and would go beyond 6.6 bcfd by 2030. Gas shortfall is expected to reach 3.999 bcfd by fiscal year 2019/20 and the shortage would reach 6.611 bcfd without imported gas by 2029/30, Ogra said in a latest report.

The regulator attributed the rise in demand and consumption by residential and domestic consumers to price differential vis-à-vis other competing fuels: liquefied petroleum gas, firewood and coal.

Pakistan relies on natural gas to meet almost half of its energy needs but its proven gas reserves have dwindled in the recent years, as consumption has outweighed new discoveries.

LNG imports are gradually substituting domestic gas and the government’s objective is to raise the share of imported gas in the nation’s energy mix by reducing use of polluting and inefficient furnace oil and expensive diesel oil in power generation.

The share of LNG imports in power generation has been continuously rising since the last three years, which resulted in the phasing out of more expensive furnace oil-based power plants.

LNG import has surpassed seven million tons a year since launch of the first terminal three years back. It is expected to reach near 24 million tons a year by 2023, according to S&P Global Platts, a provider of energy and commodities information.

Currently, the country has two terminals: Engro Elengy and Pakistan Gasport with 600 mmcfd of re-gasification capacity each.

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