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July 1, 2020

Gas consumers may have to pay billions more

Top Story

July 1, 2020

ISLAMABAD: The gas consumers may have to pay billions more on account of Petroleum Division’s decision to inject the costly imported gas to domestic and commercial consumers.

Under the new scenario, the Petroleum Division has decided to recover from consumers of RLNG the huge loss of Rs73.848 billion for diverting the costly and ring fenced RLNG to domestic and commercial sectors in the last two winters season for 2018-19 and 2019-20. The sitting government injected the imported gas in the winter season. The RLNG consumers include industrial, power, CNG, fertilizer and cement sectors and the burden will be diverted to them for injecting the costly products to domestic and commercial consumers.

And to this effect ECC (Economic Coordination Committee) that meets today (July 1, 2020) is going to pitch for approval the summary on policy guidelines with respect to sales price of RLNG. The recovery of the huge amount of Sui Northern from domestic consumers is not possible as the tariff of this category of consumers is different and at lower side. However, the non-recovery of Rs73.848 billion has multiplied manifold the financial miseries of Sui Northern which has defaulted the payments of Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL). "And because of non-payment by Sui Northern, the PSO has already defaulted in payments of the international LNG supplies twice in the recent past. And to this effect Petroleum Division has prepared a draft for ECC and circulated it with various economic ministries for their comments," the relevant officials told The News.

In the aftermath of Covid-19 pandemic, gas supply from some fields has dropped drastically compelling SNGPL to continue supplying RLNG to domestic and commercial consumers. The said differential is subject to the change based on actual volumes diverted in the winter and summer months and recouping of shortfall during the months when system gas has been sold as RLNG, Sui Northern will be required to present a proper case with data sheet before OGRA for validating its claims of RLNG diversions.

The Petroleum Division is of the view that the due to severity of weather during the past winter seasons, SNGPL was constrained to inject RLNG to domestic and commercial consumers which was in line with ECC’s approved policy guidelines. But the resultant tariff or RLNG revenue shortfall is now being compounded in the absence of recovery mechanism whereas under the RLNG ring-fenced pricing mechanism, recovery of RLNG related shortfall can only be made through monthly RLNG pricing.