Gas utility supplies LNG in violation of regulator’s orders

OGRA calls for providing LNG to bulk consumers on high-pressure network

ISLAMABAD:

Though the Ministry of Petroleum and Oil and Gas Regulatory Authority (Ogra) have pressed Sui Northern Gas Pipelines Limited (SNGPL) to supply liquefied natural gas (LNG) to consumers connected to the high-pressure transmission network, the public utility continues to supply gas to consumers linked to the distribution network.

The regulator has set a price of $8.9 per million British thermal units (mmbtu) for LNG supply to consumers on the transmission network. As SNGPL is providing LNG to consumers on the distribution network, Ogra has now directed the company to charge the cost of 4.5% unaccounted-for-gas (UFG) from the consumers and also called for releasing gas on the high-pressure transmission network.



In a letter written to SNGPL, Ogra reminded that the company had been advised to supply re-gasified LNG to bulk consumers on the high-pressure network isolated from the ‘spaghetti’ distribution network. As a result, the issue of LNG price for the compressed natural gas (CNG) sector apparently does not arise.

It pointed out that the 4.5% UFG cost, which covers wastage and leakage, would be applicable in case of LNG supply to the CNG consumers on the distribution network. Accordingly, the re-gasified LNG price is provisionally estimated at $8.9 per mmbtu.

The Ministry of Petroleum and Natural Resources, in a letter sent to SNGPL in November 2015, had recalled that the Economic Coordination Committee had already agreed that the re-gasified LNG not received by independent power producers (IPPs) would be offered to other bulk consumers at a notified sale price.

It also approved that volumes and consumer prices of LNG would be ring-fenced and considered separately from the UFG benchmark.



“Subject to availability, SNGPL may supply re-gasified LNG to bulk consumers on the high-pressure transmission network duly isolated from the distribution network,” the ministry said.

However, the company is supplying gas to the CNG and textile sectors in violation of the directive of the petroleum ministry and Ogra as these consumers are on the distribution network. It is also charging higher distribution losses from them.

Earlier, SNGPL wrote a letter to the ministry, saying that the distribution network had been designed and laid in cities, towns and villages in such a way that the same pipelines were providing gas to different categories of consumers such as industrial, textile, CNG, commercial, special domestic and bulk consumers.

CNG stations were located and scattered throughout the distribution network and hence it was difficult to provide gas to a specific sector without affecting other consumers, it said.

“Maintaining the desired pressure and flow in different segments of the distribution network may not be possible at desired locations owing to complexities,” the company said, adding LNG could, however, be provided to scattered CNG consumers at variable pressure and flow parameters at different locations.



SNGPL said efforts would be made to provide LNG to the CNG sector as a whole excluding such stations that were defaulters of the company.

Billing would be done on the basis of actual consumption at the LNG price notified by Ogra. Any shortfall or surplus will be balanced either through gas in the system or from LNG suppliers. The company will be issuing bills in advance on a daily basis to the CNG stations.

Published in The Express Tribune, February 19^th,  2016.

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