Sui Northern asks Ogra to shift Rs25 bn loss to domestic sector

ISLAMABAD: The Sui Northern has asked Oil and Gas Regulatory Authority (Ogra) to include the loss of Rs25 billion in the tariff it incurred because of injecting the costly RLNG to domestic sector in last winter season.

The News published the same story in its edition of March 29 with the headline ‘Rs25 billion loss may be passed on to consumers’ but the petroleum minister in a rebuttal had said that the government is not going to increase the prices for natural gas and RLNG consumers on account of RLNG sold by SNGPL to domestic sector during the winter season.

The Sui Northern has in toto pleaded for average raise in prescribed gas price Rs722.51 per mmbtu for 2019-20. The company has also included in tariff the loss it incurred on account of diversion of RLNG to domestic sector in winter season.

In the rebuttal issued on March 29, the government had argued that the gas company has not incurred any loss in respect of sale of RLNG to domestic consumers during the winter season.

Under the Economic Coordination Committee (ECC) decision on 11.5.2018, the gas banking mechanism has already been approved by Ogra under which RLNG is sold as system gas during the winter season while the same is recovered during the summer season on an ongoing and multi-year basis. These adjustments allowed by Ogra on the basis of final accounts of the company on a ring fenced basis in accordance with the Ogra law.

But on Monday, CFO (Chief Financial Officer) of Sui Northern asked the Ogra to include the tariff either for all consumers or for RLNG consumers against the loss of Rs25 billion the gas company is facing because of diversion of RLNG to domestic sector.

This vindicates the story of The News printed on its edition of March 29. The CFO did not stop here, rather he asked OGRA to include Rs65 billion in the tariff, out of Rs25 billion loss it braved for injecting RLNG in the domestic sector. In addition to it, Rs37 billion Sui Northern sustained loss. CFO also said that gas company has arranged Rs3 billion from the banks to ensure timely payment to PSO.

Imran Ghaznavi, OGRA spokesman, confirmed that Sui Northern during the hearing held in Lahore has included in the tariff the Rs25 plus Rs3 billion arranged from banks for payment against RLNG to PSO. He said Ogra will give its determination after thoroughly examining the demands of Sui Northern.

Ghyias Paracha, leader of CNG sector association, firmly opposed the hike in the tariff against the diversion of RLNG to domestic sector. He said that gas companies instead need to end the gas theft of Rs48 billion. He said that 93 percent of gas is being stolen in Karak out of the UFG loss of Sui Northern. In Karak, there is no law and order situation, but Sui Northern is not inclined end the gas theft which raised eyebrows of many.

The official said that OGRA may not be able to swap the system gas in summer season with RLNG which was diverted to domestic sector in winter season as the system gas in Sui Northern system has reduced to 975 mmcfd from 1.1 bcfd. In northern areas, the demand of the gas is there because of winter like situation there. So Sui Northern has no natural gas in its pipelines enough to provide to RLNG consumers as RLNG. This means that Ogra this time is likely to pass the impact of Rs29 billion in tariff to RLNG consumers or other gas consumers.

The Sui Northern pleaded that the Rs25 billion loss has aggravated the economic miseries of Sui Northern, which were already on the rise on account of provision of RLNG to the consumers like zero rated industry, fertilizer, CNG and power sector. In the wake of delayed recoveries by power sector management, the circular debt in LNG sector has swelled to Rs69 billion.

Sui Northern owes almost Rs58 billion to PSO and Rs11 billion to PLL (Pakistan LNG Limited). “The government now wants that the loss of Rs25 billion should be recovered from the gas consumers of all types except export industry,” said an official.