RLNG price jacked up by over 40pc

Israr Khan
Saturday, May 14, 2022

ISLAMABAD: The government increased the average sale price of re-gasified liquified natural gas (RLNG) for May 2022 to a historic high on Friday, jacking up this super-cooled imported gas cost by almost 40 percent, which would make local products, particularly electricity, even more expensive for millions of Pakistanis.

With steady international crude prices and LNG being pegged to the oil price, the RLNG prices for the local consumers were raised by around $6.8 per million British thermal units (mmBtu). This would escalate the energy cost and further push the inflationary pressure on the economy.

The Global Benchmark Brent price was over $111/barrel on Friday. Earlier, on March 7, it hit US$139.13 a barrel. The all-time of $147.50 was last seen in July 2008.The Oil and Gas Regulatory Authority (Ogra) issued its decision on Friday, increasing the RLNG prices for SNGPL and SSGC clients. According to the notification for May 2022, the regulator raised the provisional price of RLNG for SNGPL customers by $6.2152/mmBtu, or 39.7 percent. For SSGC customers, it was increased by $6.8772/mmBtu or 40.66 percent.

Following this hike, the price of RLNG for SNGPL clients increased from $15.6165/mmBtu in April to 21.8317/mmBtu in May 2022, and for SSGC consumers, it rose from $16.9101/ mmBtu to $23.7873 per mmBtu this month. These are the highest prices since Pakistan started importing this super-chilled fuel in 2015.

These new prices are more than double compared to prices of this fuel in the same month of the last year (May 2021). In one year, the sale price of RLNG for SNGPL customers increased 113 percent (or $11.5789/mmBtu), and for SSGC, it increased 138.6 percent or $13.8181/mmBtu compared to its prices last year. In May 2021, the prices for SNGPL were $10.2528/mmBtu and SSGC was $9.9692/mmBtu.

It is to be noted that RLNG is the second major contributor to the country’s power generation after hydroelectric sources. A jump in the prices of RLNG increases the cost of energy, which subsequently raises the tariff for power consumers.

According to March 2022 data issued by the National Electric Power Regulatory Authority (NEPRA), power generation from RLNG was 1965.68 GWh, depicting an 18.87 percent share in a cumulative generation. The per-unit generation cost was Rs14.3677/unit, while in the previous month, the RLNG-based power share was 15.16 percent, costing Rs14.3229/ unit in February 2022.

After this increase, power generation cost from imported gas will increase further in the coming months, as RLNG price has been going up for the last several months. This would be an added source of imported inflation for the public. Last month, the regulator reduced RLNG prices by a meager $0.1966/mmBtu for SNGPL and $0.2051/mmBtu for SSGC consumers.

The new notified prices of RLNG also include charges of the LNG terminals, transmission losses, port charges, and margins of the state-run importers – Pakistan State Oil and Pakistan LNG Limited. These new weighted average sale prices of RLNG have been computed based on 12 cargoes imported for the month, including eight shipments by Pakistan State Oil and four by Pakistan LNG Limited.

Production of indigenous gas stands at four billion cubic feet per day (bcfd) against the total demand of six bcfd. The country is currently importing LNG equivalent to 1.2 bcfd to meet the local requirements. There are presently two re-gasified liquefied natural gas terminals operating in the country.