ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) has considered the disconnection of Captive Power Plants (CPPs) effective January 2025, challenging and expedient to engage with the federal government.
The OGRA on Tuesday has determined the Review of Estimated Revenue Requirement (RERR) of SNGPL and SSGCL for financial year 2024-25. The determination has submitted to federal government to take decision in 40 days as per OGRA Ordinance 2002.
The oil and gas regulator observes that if the federal government decides to proceed with the disconnection of CPP, effective January 2025, the petitioner’s revenue requirement after adjustment of cushion available would amount to Rs560,161 million (Rs1,746.22 per mmbtu) thus, reducing the available cushion to Rs7,890 million.
A series of meetings were held with Minister for Petroleum Musadiq Malik and Managing Directors Sui gas companies – SNGPL and SSGC to deliberate on the issue of disconnection of captive power plants effective January 2025.
The challenges consequent to the disconnection of CPPs were discussed at length including access to national grid, surplus volumes of indigenous natural gas as well as RLNG and reduction in sales revenues impacting the overall revenue requirement.
The authority observes that in case of exclusion of CPPs supplies, the petitioner shall be constrained to divert additional 12,807 mmcf RLNG to system gas consumers with rollover of five RLNG cargoes of mmcf 5,836. Further, the authority notes that local supplies would also be curtailed over January to June 2025 tenure due to surplus volume of RLNG available in the system.
The petitioner submitted revised petition on October 18, 2024, based on the premise that captive power plants shall be disconnected from January 2025 leading to surplus RLNG in the system and consequent increase in diversion volume to domestic sector.
On query, the petitioner informed that it has no written policy communication from federal government for disconnection of CCPs, except verbal advice. The authority notes that various interveners especially industry has also raised its concerns on this matter of anticipated disconnection of CPPs from January 2025 during public hearing held in Lahore.
Copyright Business Recorder, 2024
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