"We refer to a press clipping published by Business Recorder, Lahore," dated 24-10-2015 under the heading "PEW Criticizes SNGPL for Rising Gas Tariff by 47 pc".
"We would like to clarify that Sui Northern Gas Pipelines Limited (SNGPL) strongly refutes Pakistan Economy Watch (PEW) criticism on SNGPL in respect of increase in gas tariff demanded from OGRA. It appears that Pakistan Economy Watch (PEW) is unaware of the basic facts of gas pricing mechanism and the financial condition of SNGPL wherein the company has been consistently getting rate of return of negative 7% instead of 17.5% so called profit. It is further highlighted that OGRA has not issued last 3 years determination in respect of the gas companies, primarily arising out of lack of quorum which has resulted in accumulative increase sort by SNGPL, while it is even unable to pay for the cost of gas to the Well Head Gas Producers.
"It is highlighted that Pakistan Economy Watch (PEW) appears to be unaware that SNGPL is not making a single penny as profit from the LNG end consumers, wherein, even the 5 cent/mmbtu of administrative margin allowed to the gas companies by ECC has not been allowed by OGRA, even though the company is facing additional exposure/ risk from the LNG import transaction.
"SNGPL has been charging LNG tariff from consumers based on previously MPNR and now OGRA determined price in accordance with the Law, whereas, OGRA determined transmission losses are being recovered from the LNG based consumers. "It is further highlighted that all LNG based consumers are obligated by the Federal Government to make advance security payments or furnish Letter of Credit since upfront payments have to be made to LNG Seller unlike the Natural Gas Purchasers, while no discriminatory treatment is being extended to any category of consumer".-PR