ISLAMABAD: Sui Northern Gas Pipelines Limited (SNGPL) has urged the Petroleum Division to review the policy allowing third parties to sell indigenous gas in RLNG-designated areas, arguing that all available and upcoming indigenous gas should be allocated to gas utilities to ensure affordable tariffs for the public.
In a letter to the Petroleum Division, SNGPL highlighted that the current policy creates market distortions, particularly in Punjab, where private entities are selling indigenous gas at lower rates while SNGPL is restricted to selling at OGRA-notified RLNG tariffs. This pricing disparity is driving industrial consumers toward cheaper indigenous gas, exacerbating RLNG surplus issues.
SNGPL warned that under the International Monetary Fund (IMF) reforms, shifting Captive Power Plants (CPPs) from gas utilities to the national power grid could have dire consequences. Many CPPs are opting for third-party gas shippers rather than the national grid due to high electricity tariffs and unreliable supplies. This shift, SNGPL argues, could push state-owned enterprises (SOEs) like SNGPL and PSO toward financial instability, potentially leading to sovereign default.
The company also pointed out regulatory inconsistencies, stating that third-party shippers are not required to stop supplying gas to CPPs, which undermines the IMF’s intended reforms while allowing private entities to reap windfall profits. SNGPL called for a level playing field, similar to the oil sector, where all entities, including Pakistan State Oil (PSO) and private Oil Marketing Companies (OMCs), operate under the same pricing structure.
Additionally, the letter warned of an impending RLNG surplus crisis. The departure of CPPs from the gas grid could leave SNGPL with 157 mmcfd of excess RLNG and SSGC with 40 mmcfd, totaling approximately 350 mmcfd of surplus gas. This could rise to 400 mmcfd by 2026 as KE phases out its RLNG demand. The surplus could result in around 240 excess LNG cargoes over the contract term, forcing SNGPL to divert RLNG to domestic consumers or face financial losses from take-or-pay penalties on unused LNG shipments.
SNGPL emphasized the need for urgent policy adjustments to prevent financial risks, ensure fair competition, and maintain energy affordability for consumers.
Story by Wasim Iqbal
