ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has determined charges for transportation of regasified liquefied natural gas (RLNG) to Punjab at Rs81 per mmBtu (million British Thermal Unit) for the current year.

This will yield about Rs25 billion to the Sui Northern Gas Pipeline Limited (SNGPL) during the current year. The regulator has, however, decided to consider increasing transportation charges to about Rs94 per mmBtu to adjust increase in unit cost because of lower than committed supplies.

SNGPL had demanded that the earlier working of transportation charges or cost of service at the time of determined estimated revenue requirement (DERR) was based on the assumption that RLNG supply into SNGPL system will increase from 600 million cubic feet per day (mmcfd) to 1200mmcfd with effect from July 1, 2017. However, due to delay in commissioning of the second terminal, RLNG supply could not reach 1200mmcdf until December 2017.

Accordingly, the company revised RLNG sales volume, keeping in view of updated actual figures up to February 2018, resulting into higher per unit transportation charge.

The company also factored in the volumetric and financial impact of unaccounted for gas (UFG), etc. and has computed the RLNG transportation cost in its final working at Rs93.63 per mmBtu for fiscal year 2017-18.

The regulator in its determination observed that the review under the said head had been made on plausible grounds since change in circumstances had primarily led to revision in projected RLNG sales volume in the computation of transportation charge. The regulator noted that in the working of transportation charges, SNGPL had included shortfall in revenue requirement for fiscal year 2016-17 amounting to Rs4.035bn and had pleaded that the same be included owing to short recovery of RLNG price due to different reasons.

The regulator held that transportation charge was the cost of transporting or transmitting the RLNG from Southern to Northern part of the company. “Inclusion of adjustments on account of other RLNG components under this has no logic and rationale. Accordingly, the same is not allowed”.

Based on the review of the regulations and procedures, transportation charges were provisionally determined at Rs25.381bn translating into Rs80.79 per mmBtu for the said year. Ogra said the transportation cost shall be revised in the final revenue requirement once the actual figures were available.

The regulator was informed that the federal government had allocated 200mmcfd LNG to a power plant to be installed near Trimmu Barrage, Jhang being set up by Punjab government through its company Punjab Thermal Power Limited (PTPL).

It said PTPL had desired SNGPL to undertake all gas infrastructure development works required to supply 200mmcfd RLNG to the plant on 100 per cent cost sharing basis. Accordingly, after conducting necessary surveys of pipeline route SNGPL had prepared a budgeted estimate of Rs3.981bn.

All the recovered cost of the project from PTPL shall be subject to adjustment at completion of the project without any profit margin for SNGPL. Being 100pc cost recovery project, the related capitalisation will not be entitled to rate of return as per existing tariff regime.

Cost of metering component gadgets to be installed in the metering station of the power plant is not included in the estimates submitted to PTPL and shall be borne by SNGPL which is in line with earlier Power Plant Gas supply agreements and company’s policy in vogue.

Published in Dawn, March 27th, 2018