ISLAMABAD: Sui Northern Gas Company Limited (SNGPL) has reportedly refused to sell RLNG to domestic and commercial consumers, if no mechanism is approved by the federal government, well informed sources told Business Recorder. On July 3, 2020 the ECC in its meeting while considering a summary decided: (i) OGRA to provisionally allow the recovery of RLNG revenue shortfall considering the month-wise actual RLNG volumes diverted in the domestic/commercial sectors by SNGPL and any amount available in the deferral account would also be adjusted while actualizing the RLNG sale price, subject to verification of 'volumes supplied to domestic and commercial consumers by OGRA;(ii) OGRA may create a specific head under the RLNG sale price for charging the diversion cost in a staggered manner; and (iii) upon amendment in OGRA Ordinance, 2002 for bringing RLNG in the WACOG, the balance RLNG revenue shortfall by the time amendment is made, if any, would be recouped through revenue requirements in a staggered manner. ECC directed Petroleum Division to follow up the amendments in the OGRA Ordinance for bringing RLNG in the weighted average cost. For ratification of ECC decision, Cabinet Division presented summary in the Federal Cabinet meeting held on July 28, 2020 wherein it was decided that a public awareness campaign on rationale for enhancing the K-Electric's tariff and SNGPL's gas tariff should be launched and matters should again be placed before the ECC for deliberations.
The ECC decision provides a mechanism for recovery of past arrears of RLNG diversion made to high priority domestic/commercial sector during the past two winter seasons on SNGPL network which stand at Rs 78 billion.
Petroleum Division said that in view of the approaching winter season and the. absence of approved recovery mechanism, SNGPL had apprehended that it would not be possible for them to divert RLNG to meet demand of high priority domestic / commercial sectors which would result in massive gas shortages and load management during the winter months of December, 2020 to February, 2021 whereas Punjab would be the worst affected. The projected additional gas requirement of domestic and commercial sectors on SNGPL system during approaching winter is as follows ;(i) domestic/ commercial( December, 2020- 299 MMCFD);(ii) January 2021- 673 MMCFD;(iii) February, 2021- 73 MMCFD and ;(iv) March 2021-15 MMCFD.
Petroleum Division apprised that M/s SNGPL had provided an estimated financial impact of Rs 69 billion considering the diversion of RLNG to domestic / commercial sectors based on the above projected requirement. With respect to direction of the Federal Cabinet it was pointed out that the issue of category-wise gas tariff is being separately presented to ECC in pursuance of recent determination of Estimated Revenue Requirement (ERR) for current financial year (CFY) by OGRA in respect of M/s SSGCL and SNGPL. The sources said, SNGPL has conveyed that it may not be financially possible for it to divert RLNG to domestic users in the approaching winter, if no mechanism for recovery of prior diversion is instituted. Petroleum Division proposed that the ECC may reconfirm its earlier decision for recovery of prior shortfall as well as enabling M/s SNGPL to manage the load of domestic / commercial sectors by diversion of RLNG in approaching winter. Petroleum Division submitted the proposal made in Para-6 of the summary for consideration and approval of the ECC of the Cabinet for conveying to OGRA as policy guidelines under section 21 of the OGRA Ordinance, 2002.
During the ensuing discussion in the ECC on October 7, 2020, Special Assistant to the Prime Minister on Petroleum apprised the meeting that the summary was earlier approved by the ECC. However, the Federal Cabinet while ratifying the decisions of the ECC on summary, linked it with K-Electric's tariff. The proposal in the summary was regarding recovery of past RLNG diversion in winter months, which was consumed by domestic consumers. The ECC decision will again be submitted before the Cabinet on October 13, 2020 for ratification after which the final decision will be taken to pass on the impact of Rs 69 billion onto the domestic and commercial consumers.
Copyright Business Recorder, 2020
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