SNGPL clarifies news item regarding slashing of losses allowed to it for RLNG by OGRA

November 13, 2020 (MLN): Sui Northern Gas Pipeline Limited (SNGPL) has issued a cliarfiaction regarding the news item published yesterday in a leading E-magazine about slashing of losses allowed to SNGPL for regasified LNG by OGRA for the purposes of determination of RLNG prices.

In this regard, the company clarified that the notification issued by OGRA is in contravention with Petroleum Levy Ordinance 1961 and against the Cabinet decision of allowance of actual UFG for RLNG pricing. OGRA has instead imposed a unilateral decision of 6.3% benchmark in isolation for distribution consumers only.

The Company highlighted that LNG has been declared as a petroleum product in consultation with OGRA while it has been determining prices of RLNG for the last 5 years, in accordance with the specific formula approved as policy guideline by the Federal Government (The Cabinet).   OGRA remains obligated to follow the Govt. policy parameters as per the Supreme Court decision which had clearly held that the Federal Government policy guidelines are binding on OGRA.

Presently, natural gas consumers are subject to consolidated benchmark of nearly 7% for both transmission and distribution consumers and no separate benchmark exists for transmission and distribution consumers. Instead OGRA has now assumed separate benchmarks of 0.38% for Transmission and 6.3% for Distribution. OGRA therefore has effectively reduced consolidated UFG benchmark of RLNG to 2% only as against nearly 7% for natural gas consumers.

Company further underlined that under the Petroleum Levy Ordinance, the mandate to determine and impose a UFG benchmark in case of RLNG doesn't rest with OGRA unlike the natural gas pricing which is done pursuant to OGRA Ordinance. The company is contesting the matter on relevant forums, both factually and legally.

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