ISLAMABAD: The prices of imported liquefied natural gas prices (LNG) have ratcheted up due to major rupee depreciation and rises in international LNG prices.
The LNG price for Sui Northern Gas Pipeline Limited (SNGPL) consumers have been set at $12.8 per million British thermal units (mmbtu) and $13.27 per mmbtu for Sui Southern Gas Company (SSGC), reported Express Tribune.
And these prices are inclusive of transmission losses, Port Qasim charges, importer margins and terminal charges.
For Pakistan State Oil (PSO), import cost is 10.11 per mmbtu and Pakistan LNG Limited (PLL) at $10.4 per mmbtu.
Almost three years ago, the LNG price in October 2015 clocked at $8.63 per mmbtu when global oil prices were at their lowest, to which the imported gas is pegged to.
Various LNG suppliers in Pakistan have reached agreements with Qatar which is government-to-government (G2G), global commodity trade Gunvor and Italian energy company ENI.
The prices for LNG stand between 11.6 percent and 13.37 percent of crude oil rate.
However, a senior official of the Ministry of Energy (Petroleum Division) said firm demand had not been received from power producers, which were relying on expensive furnace oil translating into higher electricity tariff for consumers.
Furthermore, as per merit order on revised fuel prices in force since June 7th, 2018, LNG-based power plants are in the highest tier and produce the cheapest electricity.
Also, LNG is an alternative and cheaper fuel compared to furnace oil for power generation purposes.
Earlier in the week Business Recorder reported state-owned gas companies Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) were facing the prospect of default against international suppliers of RLNG due to non-clearance of dues by the power sector.
According to sources in the Petroleum Division, the situation is exacerbating, and the Power Division has been ensuring supplies of RLNG to power plants since last year and LNG imports were being ensured to meet power demand.
Assistant Director (Technical) Directorate General Gas Salahuddin Khan believes a major share of electricity was being generated by RLNG-fired power plants and the installation and operation of these plants come under the purview of Power Division.
The Petroleum Division in a letter addressed to Secretary Power Division has repeated its previous opinion via several written preferences in the past that fuel arrangement for power plants is being arranged after receipt of demand from the Power Division.
And the fuel demand of the power sector has been a subject of various meetings of Cabinet Committee on Energy (CCoE) and in several coordination meetings chaired by ex-PM in last few months.
Also, the Petroleum Division contended in the absence of a firm demand of RLNG, LNG imports could be hampered which would affect power generation in the following summer months causing electricity shortage.
The non-clearance of SSGC, SNGPL dues by the power sector for RLNG supplies was creating default like situation for the state-owned gas companies.
The problem needs addressing by the Power Division on an immediate basis.
However, during a meeting of the price negotiation committee presided over by Secretary Petroleum about the sale and purchase agreements were apprised RLNG consumption in power was much below against indicated requirement as per the advice of Power Division in previous months.
The SSGC informed that during June 1st to June 24th, LNG consumption stood at 836 MMCFD compared to the nomination of 1,077 MMCFD.
To ensure appropriate figure of RLNG demand is put forth Pakistan LNG Limited (PLL) for July-September 2018, the Power Division has been asked to provide a proper confirmation to off-take from RLNG volumes on a take or pay basis.