Ogra awaits PSO’s compliance report to set LNG price

KARACHI: The Oil and Gas Regulatory Authority (Ogra) will set the end-consumer price of re-gasified liquefied natural gas (LNG) after receiving a compliance report on the gas import from the state-run Pakistan State Oil (PSO), its chief said on Wednesday.
“PSO has been advised to submit a declaration that all the rules and laws were followed for LNG import and as soon as the document is received the commodity’s retail price will be determined,” said Saeed Ahmed Khan, chairman of Ogra.
“The rates will be determined as per the parameters already fixed by the Economic Coordination Committee in July this year.”
Khan said earlier the rates could not be determined since the OGRA had incomplete quorum for long.
Pakistan is facing a gas shortage of 2.0 billion cubic feet per day and the government started importing LNG to bridge the gap.
PSO has been engaged in spot buying as yet. The imported gas was injected into the system and consumed even without a price determination by the authority.
Ogra questioned the legality of the business of LNG and advised three key oil and gas companies to secure a legal cover from the government for provisional pricing of the commodity to avoid legal and financial complications.
Ogra, in a letter to key stakeholders in the LNG supply chain, including PSO, Sui Southern Gas Company and Sui Northern Gas Pipelines Limited and ministries of finance and petroleum, said the pricing, sale and invoicing of LNG business in its existing form and documentation are not legal according to the law.
Chairman Ogra attended a hearing regarding determination of financial requirements of Sui Southern Gas Company for the fiscal year of 2015-16.
Khan said Ogra determined the gas rates for distribution companies in July 2014. These rates are fixed biannually based on the yearly revenue requirements of the utility companies.
“As the quorum was incomplete, Ogra could not be able to determine these rates in January and July 2015,” he said.
Another such hearing would be held in Quetta in a day or two after which the authority would notify gas rates for the utility companies.