ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has slashed Unaccounted for Gas (UfG) significantly for RLNG consumers for both gas companies - Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), which led to reduction in monthly prices of RLNG.

On Wednesday, the Ogra notified the prices of RLNG for August-November 2020 with new UfG, which brought to 6.3 percent equal to UfG permissible on natural gas.

Earlier, the regulator was allowing 10.67 percent to 17.11 per cent UfG to the gas utilities on distribution of LNG to the consumers.

The SNGPL was allowed to charge UfG at 11 percent and 17 percent UfG was permissible for the SSGC.

The regulator has revised the ratio of UfG in line with the directives of the Economic Coordination Committee (ECC), which decided to reduce actual UfG from the LNG consumers.

The Ogra suspended issuance of monthly notifications of RLNG prices in August.

The oil and gas regulator has noted that domestic consumers are being actual charged UfG at 6.3 per cent from indigenous gas users.

So, actual UFG allowed to the gas utilities was 6.3 per cent and gas companies are now allowed to charge the same ratio from the LNG consumers.

The PTI government diverted expensive LNG towards domestic consumers during last winter season without any recovery mechanism, which increased the receivable of the SNGPL to Rs78 billion reflected in Estimated Revenue Requirement for Financial Year 2020-2021. The amount payable to the Pakistan State Oil (PSO) and the Pakistan LNG Ltd (PLL).

The gas companies already informed the Petroleum Division that in the current winter season, an additional burden of Rs69 billion would be added due to supply of RLNG to domestic consumers.

Following a recent decision of the Ogra, the LNG prices would also come down not only for commercial and industrial consumers but also for domestic consumers.

The prices of RLNG in November 2020 are notified $7.6584 per mmbtu for SNGPL and $7.3966 per mmbtu for SSGCL consumers.

Energy experts state that it was a good decision of the regulator as it would open new avenues for private investment in LNG sector.

Due to higher LNG prices due to monopoly of the public-sector companies, the government had been facing problems by taking financial risk.

This was stated by Special Assistant to Prime Minister Nadeem Babar in a media briefing held in October 2020.

The government is engaged with the provincial governments over weighted average gas pricing mechanism to lower the prices.

However, the federal government is facing tough resistance from the oil and gas producing provinces. The PML-N government had signed an expensive LNG deal with Qatar. Even the present government is striking LNG spot deals at higher rates than Qatar’s deal.

Copyright Business Recorder, 2020