Islamabad February 14 2022: Oil and Gas Regulatory Authority (OGRA) allowed Sui Southern Gas Company (SSGC) to recover Transmission and Distribution (T&D) losses of 18.87 percent and 18.69 percent from customers on flows of PSO and Pakistan LNG terminal respectively.
“SSGC high UFG disallowance is due to the fact that OGRA is not accepting UFG based on RLNG Volume Handling allowed to SSGC vide a Summary approved by the Economic Coordination Committee (ECC) dated May 11, 2018.” Says Chief Executive Officer Muhammad Imran Maniar
If this had been allowed to SSGC on the previously net UFG disallowance, which is in line with the newly issued tariff for RLNG, this would have an impact of PKR 22.6 billion. Company profitability reduced by PKR 13.1 billion in the financial year 2019 and PKR 9.5 billion in the first nine months of 2020 due to disallowance of losses on RLNG flows.
Economic Coordination Committee (ECC) in its meeting dated May 11, 2018 approved the summary submitted by the Petroleum Division under which the Company was allowed UFG based on RLNG handling basis (volumetric basis) in the sale price of RLNG in the form of distribution loss due to swapping arrangements and consumption of RLNG in its franchise area. However, in its determination on Final Revenue requirement for FY 2017-18 OGRA did not consider implementing the aforementioned decision and advised to take up the matter with SNGPL in consultation with Ministry of Energy (Petroleum Division). The Company has reiterated its earlier position of higher UFG due to RLNG and another summary is being considered at ECC to reinforce earlier ECC decision with multiple options for its implementation
Government of Pakistan (Finance Division) in its letter dated July 06, 2020, GoP being majority shareholder has acknowledged the funding requirements of the Company and has shown commitment to extend all support to maintain the going concern status of the Company.
Allowed T&D losses cost ~USD 2.6 per MMBTU to consumers of SSGC which is built-in in the cost of RLNG billed to them.
Earlier, SSGC was allowed to charge T&D losses of 6.9 percent in their utility bills for providing LNG.
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