Non-payment by power sector: SNGPL, SSGCL facing default like situation against international suppliers

Sui Gas Companies - SNGPL and SSGCL are reportedly facing default like situation against international suppliers of RLNG due to delayed or non-payment by the power sector, well informed sources in Petroleum Division told Business Recorder.
Power Division has been providing RLNG demand of power plants since 2017 based and LNG is being imported to cope with the demand for electricity generation.
Public sector Generation Companies (Gencos), National Transmission and Despatch Company (NTDC) / National Power Control Centre (NPCC), Private Power and Infrastructure Board (PPIB) and Central Power Purchasing Agency - Guaranteed (CPPA-G) are working under the administrative control of Power Division which implies that demand for fuel for power generation - whether furnace oil, gas or RLNG - is provided by the Power Division. As such, Petroleum Division cannot directly demand fuel from entities under the control of Power Division.
According to Salahuddin Khan, Assistant Director (Technical) Directorate General Gas, it is understood that major chunk of electricity is being generated by RLNG-fired Government Power Projects (GPPs) and installation & operation of all these plants by the Power Division. Hence, the stance of Power Division for acting just as a facilitator/coordinator appears quite misplaced.
In a letter to Secretary Power Division, Petroleum Division has reiterated its earlier stance conveyed through a number of written references in the past that arrangement of fuel for power plants is being scheduled after receipt of demand from Power Division. The issue of power sector demand by Power Division has been discussed in several meetings of Cabinet Committee on Energy (CCoE) and also during the number of coordination meetings chaired by former Prime Minister during the last several months before the end of his tenure on 31 May.
Petroleum Division argues that in the absence of a firm demand of RLNG, LNG import may not be made in a timely manner which can impact on power generation in the ensuing summer months leading to electricity shortages. And due to delayed or non-payment of RLNG supplies the Sui Companies are facing default like situation against international suppliers. The matter needs to be resolved by Power Division on an urgent basis.
Meanwhile, a meeting of Price Negotiation Committee headed by Secretary Petroleum while discussing sale and purchase agreements was informed that RLNG consumption in power sector has remained much lower against the indicated requirement advised by Power Division during the preceding months.
For instance in January RLNG nomination was 690 MMCFD whereas consumption stood at 494 MMCFD. In February 2018, nomination was 652 MMCFD- consumption 469 MMFCD, in March 2018, nomination was 750 MMCFD- consumption 583 MMCFD and in April nomination was760 MMCFD- consumption 729. On May 1-4 nomination was 615 MMCFD while consumption stood at 670 MMCFD and May 5- 14, nomination was 780 MMCFD whereas consumption was 625 MMFCD. From May 15 to May 31, 2018 consumption was 767 MMCFD against nomination of 887 MMCFD.
According to the SSGC, from June 1 to June 24, consumption was recorded at 836 MMFCD against nomination of 10 77 MMCFD.
In order to place firm RLNG demand to Pakistan LNG Limited (PLL) for import of LNG for the forthcoming months (July-September, 2018), Power Division has been requested to convey its explicit confirmation to off-take from RLNG volumes on take or pay basis.
According to officials, it is a matter of grave concern for SNGPL since unutilized RLNG cannot be diverted to other sectors without financial hit from tariff differentials and also results in operational difficulties apart from inability to pay upstream suppliers due to less consumption/sales.
"SNGPL is not in a position to confirm RLNG requirement to Pakistan LNG Limited (PLL) owing to such erratic RLNG consumption by power sector till confirmation of off-take firm volumes on take or pay basis by Power Division is explicitly communicated," the official added.