Is the increase in LNG prices for SSGCL a betrayal to consumers in Sindh and Balochistan?
- Ogra has increased the sale price of RLNG for SSGCL and decreased it for SNGPL for January 2025.
- SSGCL's transmission loss has risen to 16.16%, compared to SNGPL's 8.6% loss.
- Consumers may face higher prices due to operational inefficiencies and the proposed pricing structure.
In Pakistan, the Oil and Gas Regulatory Authority (Ogra) announced changes to the sale prices of Regasified Liquefied Natural Gas (RLNG) for January 2025. The notification revealed that the sale price for Sui Southern Gas Company Limited (SSGCL) saw a moderate increase due to rising system losses, now reported at a record 16.16%. In contrast, Sui Northern Gas Pipelines Limited (SNGPL) experienced a reduction in its RLNG pricing, reflecting an improvement in their operations and lower system losses set at 8.6%. The increase for SSGCL raised the transmission stage price by 0.44% to $10.59 per million British thermal units (mmBtu), while the distribution stage saw a slight increase of 0.45%, now set at $12.6 per mmBtu. This shift in pricing illustrates the challenges SSGCL faces with high distribution losses, which contribute significantly to inflated prices. Notably, these new prices for SSGCL exceed the average delivered price of LNG from Pakistan State Oil (PSO) by a considerable margin. On the other hand, SNGPL's RLNG price at the transmission stage decreased by 1.98%, now sitting at $11.73 per mmBtu, while distribution costs were lowered by 1.8% to $12.67 per mmBtu. The adjustments for SNGPL indicate a more efficient gas delivery system, as evidenced by their minimized losses compared to SSGCL. Despite the cut in prices for SNGPL, their distribution costs remain significantly higher than PSO’s delivered price. These pricing adjustments come amidst a backdrop of growing concern regarding system losses and their direct impact on consumers. The significant differences between the prices of SSGCL and SNGPL highlight the critical nature of operational efficiency for gas companies in Pakistan. As these costs are ultimately passed on to consumers, the regulatory changes initiated by Ogra aim to address the economic realities associated with gas supply and distribution while securing a more stable energy market for the populace. The authority's calculations are based on a basket of 11 cargoes for January and present a transparent viewpoint of the energy situation in Pakistan, laying the groundwork for future revisions and strategic decisions in the LNG sector.