The Oil and Gas Regulatory Authority (OGRA) has reviewed the potential disconnection of Captive Power Plants (CPPs) effective January 2025, citing challenges and emphasizing the need for engagement with the federal government, according to a news report.
On Tuesday, OGRA determined the Review of Estimated Revenue Requirement (RERR) for Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for the fiscal year 2024-25. The determination has been submitted to the federal government, which is required to decide within 40 days as per the OGRA Ordinance, 2002.
OGRA noted that if the federal government opts for CPP disconnections, SNGPL’s revenue requirement—after adjusting for available cushions—would amount to Rs560.16 billion (Rs1,746.22 per mmbtu), reducing the cushion to Rs7.89 billion.
A series of meetings involving Petroleum Minister Musadiq Malik and managing directors of SNGPL and SSGC discussed the ramifications of disconnecting CPPs, including access to the national grid, surplus volumes of indigenous natural gas and RLNG, and reduced sales revenue affecting overall revenue requirements.
OGRA stated that disconnecting CPPs would compel the diversion of an additional 12,807 mmcf of RLNG to system gas consumers, with a rollover of five RLNG cargoes totaling 5,836 mmcf. Local gas supplies could also be curtailed during January to June 2025 due to surplus RLNG in the system.
The revised petition submitted by SNGPL on October 18, 2024, assumed CPP disconnections from January 2025, resulting in surplus RLNG and increased diversion to the domestic sector. However, the petitioner admitted that it has no formal written directive from the federal government on CPP disconnections, only verbal advice.
The matter also drew concerns from industry stakeholders during a public hearing held in Lahore, where various interveners voiced apprehensions over the potential CPP disconnections and their impact.
OGRA’s recommendations remain contingent on the federal government’s final decision, which will influence both revenue frameworks and the future energy supply chain.
