Government Raises RLNG Rates for September Due to Losses and International Prices Impact

The government has implemented an approximately 3 percent increase in the average monthly sale price of re-gasified liquefied natural gas (RLNG) for September 2023. This decision has driven by significant transmission and distribution losses, amounting to $1.2 million per cargo, and the adverse effects of international price fluctuations on the domestic energy sector.

Rate Adjustments: As of September 1, 2023, the Oil and Gas Regulatory Authority (OGRA) has adjusted the RLNG sale prices for both Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) customers.

• SNGPL Customers: The RLNG sale price at the transmission stage has risen by 2.76 percent to $11.86 per mmBtu, while at the distribution stage, it increased by 2.79 percent to $12.84 per mmBtu.
• SSGCL Customers: For SSGCL consumers, the RLNG rates have adjusted to $11.47 per mmBtu at the transmission stage and $13.36 per mmBtu at the distribution stage.

Impact of System Losses: OGRA’s tariff sheet highlights that SSGCL has reported notably high system losses, which will be borne by consumers following the latest RLNG rate revision. SSGCL’s distribution system losses reached 14.36 percent, contrasting with SNGPL’s lower loss rate of 8.23 percent. Additionally, SSGCL’s transmission losses stood at 0.12 percent, whereas SNGPL recorded 0.38 percent in transmission losses.

Price Discrepancy: The RLNG distribution prices for both SSGCL and SNGPL are significantly higher, by over $3.64 and $3.12 per mmBtu, respectively, compared to the delivered price ex-ship (DES). This disparity arises from profit margins imposed by Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL), calculated as 3.15 percent and 3.1 percent of the DES price, respectively. These margins are in addition to the system losses incurred by SSGCL and SNGPL.

Basket RLNG Price: The basket RLNG price has determined based on nine cargoes, including eight from LNG contracts with Qatar and one from a private provider under a long-term contract. The import stage DES price amounted to $9.76 per mmBtu.

Government Policy Guidelines: OGRA’s rate adjustment aligns with federal government policy guidelines released by the Energy Ministry. These guidelines take into account the challenges faced by the domestic energy sector, including losses and international price fluctuations.

In conclusion, the increase in RLNG rates for September 2023 reflects the government’s response to pressing issues in the energy sector. It aims to address losses and external price influences while adhering to established policy guidelines.