Off-take on firm take-and-pay basis: SNGPL refuses to import RLNG until government makes commitment

Sui Southern Gas Pipeline Company Limited (SNGPL) has reportedly refused to import Re-Gasified Liquefied Natural Gas (RLNG) until Power Division commits off-take on firm take-and-pay basis, well informed sources told Business Recorder.
Pakistan LNG Limited (PLL), sources said, has floated a tender for procurement of LNG cargoes to be delivered during September and October 2018 and requested to be provided RLNG demand for aforementioned months, latest by July 26, 2018 against firm "take or pay basis"
General Manager (Sales) in a letter to Joint Secretary Power Division (Power Finance) said that previously Power Division had indicated RLNG requirements which however have been varying downwards constraining SNGPL to resort to curtailment of RLNG. This has been the main stumbling block in respect of forecasting RLNG supplies and has been the case till now.
According to SNGPL, it is a matter of grave concern for SNGPL since unutilized RLNG cannot be diverted to other sectors without a financial hit of differential of tariff and also results in operational difficulties apart from inability to pay upstream suppliers due to less consumption/sales. SNGPL is therefore not in a position to confirm the RLNG requirement for September and October 2018 to PLL, owing to such erratic RLNG consumption by power sector, till confirmation to off-take firm volumes on Take or Pay basis by Power Division is explicitly communicated.
The General Manager further stated that unless and until Power Division commits off-take of RLNG volumes on firm Take or Pay basis, "we shall not be able to place order for RLNG with upstream supplier and consequently requisite RLNG volumes will not be available during the coming months. Less off-take of RLNG by power sector may have serious consequential effects for sustainability of LNG supply chain," he said requesting to confirm requirement of RLNG on firm take or pay basis during September and October 2018 and ensure its consumption as per the indicated requirements along with timely payment of outstanding dues.
The gas company further stated that SNGPL will pass on any consequential loss to Power Division in any eventuality arising from deviation in RLNG consumption.
SNGPL is also facing financial problems owing to non- payment by power sector against RLNG supply. Likewise, Pakistan State Oil (PSO), which supplies furnace oil to the power sector is also complaining of non-payment of dues to which its circular debt is increasing day by day.