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SNGPL Refuses to Sell RLNG Without Recovery Mechanism For Arrears
Sui Northern Gas Company Limited (SNGPL) has refused to sell Regasified Liquefied Natural Gas (RLNG) to domestic and commercial consumers unless a mechanism is approved by the federal government, Business Recorder reported on Monday.
The Economic Coordination Committee (ECC) had decided in its meeting held on July 3, 2020, that OGRA will provisionally allow the recovery of RLNG revenue shortfall by SNGPL and any amount available in the deferral account would also be adjusted while actualizing the RLNG sale price.
The committee had also decided that OGRA may create a specific head under the RLNG sale price for charging the diversion cost in a staggered manner.
To understand it simply, the ECC decision provided a mechanism for recovery of past arrears of RLNG diversion made during the past two winter seasons on the SNGPL network, which stand at Rs. 78 billion.
The Cabinet Division gave a summary in the Federal Cabinet meeting held on July 28, 2020, wherein it was decided that a public awareness campaign on the rationale for enhancing the K-Electric’s tariff and SNGPL’s gas tariff should be launched and matters should again be placed before the ECC for deliberations.
Petroleum Division said that in view of the coming winter season and the absence of an approved recovery mechanism, SNGPL was concerned that it might not be possible for them to divert RLNG to meet the demand of high priority domestic and commercial sectors, which could result in massive gas shortages during the winter season.
The Petroleum Division was also informed that SNGPL will have an estimated financial impact of Rs. 69 billion considering the diversion of RLNG to domestic/commercial sectors based on the above-projected requirement.
“It may not be financially possible for it to divert RLNG to domestic users in the approaching winter, if no mechanism for recovery of prior diversion is instituted,” said SNGP.
The ECC decision will again be submitted before the Cabinet on October 13, 2020, for ratification after which the final decision will be taken to pass on the impact of Rs. 69 billion onto the domestic and commercial consumers.