ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) is likely to seek a response from Sui Northern Gas Pipelines Limited (SNGPL) over the issue of charging local gas consumers with the rate of Re-gasified Liquefied Natural Gas (RLNG), it was learnt.
Well-informed sources disclosed to Pakistan Today that SNGPL has issued gas bills to its local gas consumers and imposed RLNG rate from December 2017 to March 2018, which is a violation of OGRA’s rules. They said SNGPL has issued gas bills worth Rs3 lakh to Rs15 lakh to commercial and industrial consumers the consumers, which are local gas consumers. Imposition of additional tariff without the approval of OGRA is a sheer violation of concerned rules, said sources.
Sources also said that SNGPL has imposed RLNG rate on the gas bills of local gas consumers apparently because the gas utility (SNGPL) wanted to urgently collect Rs5 billion. The SNGPL imposed RLNG rate on commercial and industrial gas consumers in a bid to collect an additional amount from the consumers and OGRA is expected to take action over illegal charging of the consumers with the additional tariff, said sources.
Citing SNGPL plea over additional charging of the consumers with RLNG rate, the sources said the gas utility has charged the consumers with RLNG rate as the consumers have used additional gas from December 2017 to March 2018.
According to OGRA Ordinance and notification, the gas tariff of local gas stands at Rs700 per Million British Thermal Unit (MMBTU) and tariff of imported gas is more than Rs1300/MMBTU. Also, OGRA is not authorised to charge RLNG rate from those consumers who have not signed agreements with gas utility for the use of RLNG.
It is also learnt from sources that owing to less use of RLNG in power and industrial sectors from December 2017 to March 2018, SNGPL has pumped RLNG to the local gas consumers including domestic and imposed RLNG rate. They said SNGPL is authorized to charge additional tariff only from those commercial and industrial consumers which have inked an agreement with gas utility in this regard. However, SNGPL has imposed RLNG rate on all commercial and industrial gas consumers despite the fact that some commercial and industrial consumers fall in the category of local gas consumers and they have not signed such agreements with SNGPL.
Sources further informed that some industrial units have refused to procure RLNG from SNGPL owing to a continuous increase in RLNG price. These industrial units of Punjab province procure gas from SNGPL to run their captive power plants for uninterrupted power supply. However, due to expansive RLNG, these industrial units have made arrangements with Water and Power Development Authority (WAPDA) for the supply of electricity.
When contacted with OGRA spokesman, he said SNGPL is not authorized to charge the local gas consumers with RLNG rate. He said SNGPL can charge RLNG rate from those gas consumers who have already made agreements with gas utility. OGRA may take action in case of violation of approved tariff, he added.
It is pertinent to mention that Punjab’s 3600 MW RLNG-run power plants have so far failed to produce the required electricity due to which billions of rupees worth LNG (Liquefied Natural Gas) terminals and import projects are about to fail as these plants have been consuming less RLNG against the committed demand. And, Managing Director (MD), Pakistan LNG Limited has already informed the concerned quarters that the cancellation of cargoes.
Though PPL has arranged the import of LNG in line with the confirmation and commitments from Sui Northern Gas Pipelines Limited (SNGPL), however, SNGPL has failed to honour its commitments in the form of its off-take of LNG. To some extent due to this, Pakistan LNG Limited is faced with heavy penalties as it has to cancel more than one dozen cargoes of LNG which were to be consumed in these three RLNG-run power plants.
“The scheduled imports have been disrupted because of reduced off-take of RLNG by SNGPL. As a result, penalties, demurrages and LDs are being triggered,” said document available with Pakistan Today.
Taking cognizance of the issue, Pakistan LNG Limited (PLL) Managing Director (MD) Adnan Gilani, in a letter to Director General (Gas), Ministry of Energy (Petroleum Division), has categorically stated that “PLL is expressly stated that SNGPL and or the governing ministry will be responsible for all costs associated therewith.”
He further said that the recent developments have the potential to derail this well-thought –out and essential policy initiative as it opens the way for deficiencies in energy/gas as early as this summer.”
Sources at Petroleum Division also said that Prime Minister Shahid Khaqqan Abbasi is seriously worried over the failure of 3600mw power plants of Punjab province as they have failed to produce the electricity as per their full capacity. Moreover, billions rupees worth LNG projects including import and terminal are also at stake apparently because of the failure of the $2 billion and 60 crore worth RLNG-run power plants which were installed under the leadership of favourite bureaucrats of chief minister Punjab Shahbaz Sharif.
They said the PLL inked agreements with international firms to meet the gas demand of 540 million cubic feet per day gas (Re-gasified Liquefied Natural Gas) of these three power plants. They said the delay in the full power generation from these plants is costing heavily to the national exchequer while the total loss due to this delay is greater than the loss appeared in much-touted Nandipur Power Plant and NAB (National Accountability Bureau) may take notice of this heavy financial loss to the exchequer.
It is worth mentioning here that the second LNG terminal at Port Qasim was constructed/installed to meet the gas demands of these RLNG-run power plants and agreements were signed with international firms for the import of three LNG cargoes on monthly basis. However, Punjab’s RLNG-run power plants became operational during March to July 2017 with half simple cycle production capacity. These power plants were expected to start full production in December 2017 as per agreement. And, due to the failure of these three power plants in producing electricity at full capacity, LNG terminal of Pakistan Gas Port is being underutilised (40 per cent) and is facing $0.15 million penalty on a daily basis.
