RLNG prices reduced by over 15pc for April 2020

ISLAMABAD: Owing to a sharp decline in the price of crude oil in the international market, the government on Monday reduced the prices of Re-gasified Liquefied Natural Gas (RLNG) for April by 15.67 percent for Sui Northern Gas Pipelines Limited (SNGPL) and 15.9 percent for Sui Southern Gas Company (SSGC) over the previous month.

The Oil and Gas Regulatory Authority (OGRA) has notified the RLNG prices by setting the new prices at $9.5834/mmbtu for the consumers of SNGPL and $9.5582/mmbtu for SSGC. In the previous month of March, the RLNG price for SNGPL was $11.367/mmbtu and for SSGC, it was $11.3681/mmbtu. In absolute terms, the RLNG price was slashed by $1.7836/mmbtu for SNGPL and 1.8098/mmbtu for SSGC.

Economists believe that the decline in imported gas price will have a very positive impact on reducing the inflationary pressure on economy. It is worth mentioning that last week, the government had also slashed the LPG price by 30.25 percent to Rs1,067.39/cylinder for April, which was the lowest in the last 17 years. Since, RLNG is the major contributor to power generation after hydel sources, so with the decline of the RLNG prices, the cost of energy will also reduce and the benefit is likely to be passed on to power consumers.

According to the National Electric Power Regulatory Authority (NEPRA) data, in January 2020, power generation from RLNG was 957.8 GWh having 12.29 percent share in overall pie of power generation from all sources. However, coal for the first time was the top contributor with 2500.78 Gwh (or 32.09pc) of electricity to the national grid. The new notified prices of RLNG also include charges of the LNG terminals, transmission losses, port charges, and margins of the importers i.e. Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL). These new weighted average sale prices of RLNG were computed, based on the seven cargoes imported for the month including five cargoes by PSO and two by Pakistan LNG Limited (PLL).

The LNG is an imported product and remains pegged with the international oil prices. With the drop in oil price in the international market, LNG’s cost can also go down in the months to come, and will benefit the domestic and industrial sectors.