ISLAMABAD: Sui Northern Gas Pipelines Limited (SNGPL) has called on the Petroleum Division for urgent support to finalise a gas cost equalisation arrangement with Sui Southern Gas Company Limited (SSGC) and to include the full financing cost of short-term RLNG borrowings in the RLNG price structure to ensure cost recovery.
In a letter to the Director General (Gas) at the Petroleum Division, SNGPL’s Chief Financial Officer (CFO) reaffirmed the company’s commitment to meeting its financial obligations, including payments to Pakistan State Oil (PSO). The letter highlighted that accumulated payment shortfalls to PSO stem from structural challenges rather than inefficiency or mismanagement.
The CFO identified several key factors contributing to financial stress:
RLNG Diversion to Domestic Sector: Winter demand spikes and limited indigenous gas availability require SNGPL to divert expensive RLNG to the domestic sector, creating a tariff-cost mismatch.
Delayed Subsidies and Refunds: Subsidies for RLNG supplied to the fertiliser sector remain unreleased, while significant sales tax refunds and receivables are pending.
Reduced Power Sector Demand: Lower RLNG consumption by the power sector has forced redirection to subsidised sectors, worsening cost recovery.
Pending Gas Cost Equalisation: Unresolved equalisation issues with SSGCL have exacerbated liquidity pressures.
Unapproved Finance Costs: While OGRA has agreed to include finance costs for short-term RLNG borrowings, delays in implementation have cost SNGPL Rs. 35 billion, further straining liquidity.
Despite these challenges, SNGPL has honoured its commitments, paying Rs. 1,821 billion against PSO’s Rs. 1,824 billion billing from July 2023 to December 2024. However, winter payment shortfalls remain significant, with an estimated Rs. 25 billion deficit projected for January 2025.
The CFO urged the Ministry of Energy (Petroleum Division) to expedite interventions to resolve these critical issues, ensure uninterrupted RLNG supply, and stabilise the payment cycle.
Story by Mushtaq Ghumman
