PLL’s inefficiencies cause losses to the tune of Rs.1.8b

ISLAMABAD: The country has faced a loss of approximately Rs1.8 billion in two months (May and July 2018) as Pakistan Liquefied Natural Gas Limited (PLL) has apparently failed to effectively manage LNG supplies in order to efficiently utilise the terminal committed capacity, sources said.

Sources in the energy ministry informed Pakistan Today that PLL failed to bring six cargos of LNG into the country during the ongoing month of July 2018. So far, it (PLL) has imported only three LNG cargos although the import of six cargos was required in July to meet the electricity demand. And, owing to lesser import of LNG, the use of the LNG terminal of Pakistan Gas Port Consortium (PGPC) remained low, while the price of imported gas witnessed a hike and reached Rs55 per million British Thermal unit (MMBTU) and the country has to face an approximate loss of Rs0.42 billion in one month of July 2018, said sources.

They added that although due to the lesser import of LNG by the PLL during the two months of May and July 2018, the usage of PGPC terminal reduced, however, the country has to bear around Rs1.8 billion in losses.

The sources also said that poor LNG policy of former Prime Minister Shahid Khaqqan Abbasi coupled with the alleged inefficiency of PLL towards effectively managing LNG supply in order to efficiently utilise the terminal committed capacity and meeting consumers demand would heavily cost the masses. Also, for six months, the masses will face more than Rs3 billion in losses while the owners of PGPC terminal will earn billions of rupees. They said that textile, commercial and fertilizer sectors are forced to avoid the use of LNG due to increases in LNG prices in the country. While the hike in LNG price has been causing the increase in electricity tariff and adding woes and worries to country’s economy as well, they added.

Copies of available documents further disclose that the Oil and Gas Regulatory Authority (OGRA), while determining the weighted average sale price of Re-gasified Liquefied Natural Gas (RLNG) for the month of May 2018, has expressed grave concerns and imposed Rs560 million penalty on PLL (Pakistan LNG Limited) and declared the entire supply chain management as inefficient. OGRA said contrary to the decision taken by the ECC, the terminal charges have increased to $1.1671 million British Thermal Units (MMBTU) from $0.4177 per MMBTU owing to underutilised capacity.

“The authority, therefore, in view of foregoing determines the terminal charges at $0.4177 per MMBTU and advises M/s PLL to effectively manage LNG supply in order to efficiently utilise the terminal committed capacity and meet consumers demand”, said OGRA in a letter to PLL and PSO’s MD, dated May 4, 2018.

It is relevant to mention that following reports of alleged pressure by former prime minister Shahid Khaqan Abbasi to revoke OGRA’s decision, the Authority (OGRA) finally decided on 25th May 2018 to cancel the Rs560 million penalty placed on PLL for cancelling the import of four LNG cargoes to the country and decided to pass on millions of rupees heavy penalty to RLNG consumers instead of PLL or the Ministry of Energy. Also, PLL collected the amount of penalty (Rs560 million) from the gas consumers of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) and paid the amount to Pakistan Gas Port Consortium (PGPC).

Officials at the Petroleum Division on condition not to be named said that PLL inked agreements with international suppliers to meet the 540MCFD gas demand of Punjab’s 3600mw RLNG-run power plants. So far, PLL has been cancelling the import of LNG cargoes from the last many months to the country and causing additional burden on LNG consumers. They said because of the cancellation of the import of LNG cargoes to the country, the national exchequer will face heavy losses, while it pays terminal charges to PGPC on top of it. PLL MD has also written a letter to the premier and informed that Punjab’s 3600mw RLNG run power plants have failed to purchase RLNG from SNGPL though PLL has signed agreements with LNG suppliers to bring LNG to the country, said sources.

Despite repeated attempts for Managing Director (MD) Pakistan LNG Limited (PLL) Adnan Gilani formal stand/official stance, he did not respond to telephone calls or text messages on his personal cell phone number.

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Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].
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