February 06, 2024 (MLN): In response to the petition filed by the Sui Southern Gas Company Limited (PSX: SSGC) to rework the RLNG cost of service, the Oil & Gas Regulatory Authority (OGRA) has recalculated the RLNG cost to be Rs14.680 billion (equivalent to Rs33.52/MMCF or Rs31.77/MMBTU) for FY24.
The petitioner (SSGC) had projected Rs22.549bn (Rs51.48 per MMCF at gross capacity 1200 MMCFD) on account of RLNG's cost of service for the said year.
Additionally, the gas company requested the Authority to allow Rs2.571bn on account of financial charges on short-term borrowing costs for the said year.
Regarding financing, SSGC disclosed that it had secured Rs25bn through commercial borrowing.
This was done to address Pakistan State Oil (PSO)'s liquidity challenges within the RLNG supply chain and ensure the seamless operation of its activities.
These actions were taken following directives from the Ministry of Energy (MoE) and subsequent approval from the Economic Coordination Committee (ECC) or the Federal Cabinet.
The gas company further stated that OGRA has already allowed these expenses to SNGPL as operating expenses and included in RLNG price to be recovered from RLNG consumers.
In view of the same, the authority was requested to allow the said amount on account of financial charges for the said year.
The petitioner further requested the Authority to allow Federal Excise Duty (FED) amounting to Rs4.621bn in RLNG pricing for said year as per the order of FBR on RLNG re-gasification activity.
SSGC explained that the Authority is notifying provisional RLNG prices on a monthly basis without considering the FED component.
Resultantly, FED liability has been accumulating since the inception of the RLNG business, which is expected to be Rs24bn till FY24.
In view of the same, the Authority was asked to consider the FED component for RLNG monthly price notification.
In response to these adjustments requested by the company, OGRA highlighted that monthly RLNG pricing is not covered under the instant determination and the request of the petitioner may be made part of the respective price determination.
Accordingly, the same is excluded from RLNG's cost of service for the said year.
Further, the authority, per the decision relating to WPPF in its previous determinations has decided to exclude Rs1,392bn from RLNG's cost of service.
It is pertinent to note that this amount will be considered at the time of Full Revenue Requirement (FRR) based on actualization.
Reworked RLNG price for SSGC
| Description | As Allowed |
|---|---|
| Quantitative Data (MMCF) | 438,000 |
| Quantitative Data (MMBTU) | 462,090 |
| Revenue Expenditure Relating to RLNG | 4,196 |
| Financial Charges for RLNG | 2,571 |
| Excise duty | – |
| Depreciation | 1,474 |
| Contribution to VVPPF | – |
| ROA | 6,430 |
| Cost of Supply of RLNG | 14,680 |
| Cost of Supply of RLNG (Rs/MMCF) | 33.52 |
| Cost of Supply of RLNG (Rs/MMBTU) | 31.77 |
Amount in Rs Million
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Posted on: 2024-02-06T16:31:40+05:00
