Thursday October 21, 2021

OGRA notice pushes RLNG price to 15-month high

October 13, 2021
OGRA notice pushes RLNG price to 15-month high

ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) on Tuesday jacked up the average sale price of re-gasified liquefied natural gas (RLNG) for October up to $0.4362 per million British thermal unit (mmBtu), taking the price to a 15-month high.

The decision has increased RLNG prices for SNGPL and SSGC clients by more than double compared to the corresponding month of last year. In the month under review, sale price of imported gas for SNGPL increased 112.85 percent (or $8.3679/mmBtu) and for SSGC it increased 116.76 percent or $8.3672/mmBtu.

According to the notification for October 2021, the regulator raised the provisional price of RLNG for SNGPL customers by $0.4294/mmBtu or 2.79 percent and for SSGC customers by $0.4362/mmBtu or 2.89 percent. Since July 2019, these are the highest prices.

Following this hike, the price of RLNG for SNGPL clients increased from $15.3534/ mmBtu in September to 15.7828/mmBtu in October, and for SSGC consumers it increased from $15.0918/ mmBtu in September to $15.528 per mmBtu this month.

Last month, the regulator raised RLNG prices by $2.1359/mmBtu for SNGPL and $2.1369/mmBtu for SSGC consumers.

These new weighted average sale prices have been computed based on the 12 cargoes imported for the month, including six cargoes each by Pakistan State Oil and Pakistan LNG Ltd (PLL).

Since LNG is an imported product, it is pegged with international oil prices. An increase in international oil prices means OGRA has to raise prices as well.

It is to be noted that RLNG is the second major contributor in the country’s power generation after hydroelectric sources. A jump in the prices of RLNG increases the cost of energy, which subsequently raises the tariff for power consumers. According to August 2021 data issues by the National Electric Power Regulatory Authority (NEPRA), power generation from RLNG was 2,895 GWh, depicting 18.01 percent share in cumulative generation. The per unit generation cost was Rs13.4401/unit in August, while in July the RLNG-based power share was 20.01 percent costing Rs12.0604/unit.

In August, due to high price of RLNG, its cost of power generation was at the third place after high-speed diesel generation cost of Rs22.625/unit and residual fuel oil (RFO) based power generation of Rs18.24/unit. Power generation cost from imported gas would likely increase further in the coming months, as RLNG price has been going up for the last few months. This would be an added source of imported inflation for the public.