ISLAMABAD: In a rare development, the Oil & Gas Regulatory Authority (Ogra) on Tuesday retracted a notification it issued a day earlier that increased the prices of regasified liquefied natural gas (RLNG) by more than 5.5 per cent for the current month on the basis of an expensive $20.055 per mmBtu cargo.

“As informed by PSO (Pakistan State Oil) that they have scrapped the cargo with offered price of 27.87pc of Brent, RLNG price notified on 2nd August is no more valid and August RLNG price notification is being withdrawn,” said a revised notification issued by the regulator.

Informed sources said the regulator had to withdraw the notification under pressure from the Ministry of Energy which came under public criticism for acquiring expensive LNG import cargo amid mismanagement of various fuels as power consumers faced the brunt of loadshedding in humid weather conditions despite purported surplus generation capacity.

Energy Minister Hammad Azhar, through his social media account, made a scathing attack on a Dawn report that showed PSO’s costliest cargo in the Ogra’s RLNG notification, alleging “fake reporting”, knowing little that the Ogra notification was based on PSO’s own data. His ministry did not issue any press statement.

PSO too, in a separate social media statement, denied that it had contracted the expensive deal in the spot market and claimed it had scrapped the bid and re-invited fresh bid, saying it had scrapped the bid as it was ‘high’ and ‘unacceptable’. The country’s largest company by revenue and largest fuel supplier, however, did not show bid results and its decision to scrap the bid on its official website.

Informed sources said that following the Dawn report based on official notification, PSO informed Ogra through an email about its decision to scrap the expensive bid offer. Ogra withdrew the earlier RLNG sale price notification.

PSO also denied keeping the bid results secret, insisting that it always maintains absolute transparency in all its business dealings and practices but did not show on its website where these results were made public. “All bid results are published on PSO’s website as per Public Procurement Regulatory Authority (PPRA) rules,” it added.

The company said it had entered into a new long-term supply contract with Qatar Petroleum (QP), supplies against which will start in January 2022 and this will further reduce the basket price of LNG being imported in the country. This deal was announced early this year by then SAPM Nadeem Babar.

Considering the higher demand in the upcoming winter season, PSO has exercised the option in the new QP contract for bringing four additional cargoes in November and December at the new contractual prices, which are expected to be much lower than the market price during winter, it said.

Ogra said the it had issued the RLNG price notification that was computed based on available data at the time of computation. “Since prices are for the month in advance, many pricing components are calculated for determination of prices on a provisional basis based on available data at that time, which was later actualised by Ogra based on actual costs incurred”.

By the time, however, thousands of motorists using compressed natural gas (CNG) as transport fuel, had been charged at the higher rates already notified a day earlier who could not be traced or verified to have been overcharged.

The Aug 2 notification issued by Ogra regarding “determination of LNG weighted average sale provisional price” said the LNG price for the month was computed in the light of federal government’s decision on LNG allocation and pricing and advice from the Ministry of Energy.

The LNG Prices notified by Ogra — and as mentioned in the Dawn report — were based on data/prices provided by PSO. Ogra doesn’t have its own data gathering mechanism about LNG and solely relies on prices contracted by and reported by LNG importers — PSO and Pakistan LNG Ltd (PLL).

Prior to the report, PSO had not issued a public statement about cancellation or tendering. Till filing of this report late in the night, Ogra had not issued any fresh RLNG price notification.

Published in Dawn, August 4th, 2021