Gas crisis in the country has been mitigated by the government but this at the cost of Sui Northern Gas Pipeline Limited (SNGPL). Imported gas which normally is expensive has been advised by the government to be diverted to domestic consumers in the last two winter seasons and this has cost the SNGPL Rs.73 billion of the shortfall.
Oil and Gas Regulatory Authority revise the gas prices of natural gas for domestic consumers on six months basis whereas, the notification regarding re-gasified liquefied natural gas (RLNG) sale price to SNGPL is produced every month.
At present, there is no mechanism in place to recover RLNG from domestic consumers.
Sale price domestic consumers pay for gas is Rs.350 per unit while, on the other side, it cost SNGPL Rs.1700 for each unit delivered to the consumer. This accumulatively has piled up Rs.73 billion of tariff differential.
Due to the diversion of RLNG gas to consumers, the Petroleum Division has approached the Economic Coordination Committee (ECC), to recover the difference from domestic costumers.
The severe weather and shortage of supply from gas fields have compounded the shortfall in revenue and because to meet the demand the diversion was recommended without pricing mechanism to recover the cost, this has led to the loss of revenue. A mechanism should be in place to recover this shortfall from domestic consumers on a monthly basis.
As per the monthly diversion of RLNG to domestic consumers, it was proposed to ECC that SNGPL should be provisionally allowed to recover the cost accordingly.
Officials recommended the weighted average price of RLNG and locally produced gas prices to improve supply but this was denied by provinces.