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OGRA’s Recent RLNG Notification Violates Petroleum Levy Ordinance and Cabinet Decision

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LAHORE– A Sui Northern Gas Pipelines Limited (SNGPL) spokesman has said a recent RLNG price notification issued by the Oil and Gas Regulatory Authority (OGRA) is in contravention with the Petroleum Levy Ordinance 1961 and against the Cabinet decision of allowing of actual UFG for RLNG pricing.

OGRA has instead imposed a unilateral decision of 6.3% benchmark in isolation for distribution consumers only, says a press release issued on Friday.

It is highlighted that LNG has been declared as a petroleum product in consultation with OGRA while it has been determining prices of RLNG for last 5 years, in accordance with the specific formula approved as policy guideline by the Federal Government(The Cabinet). OGRA remains obligated to follow the Govt. policy parameters as per the Supreme Court decision which had clearly held that the Federal Government policy guidelines are binding on OGRA

Presently, natural gas consumers are subject to consolidated benchmark of around 7% for both transmission and distribution consumers and no separate benchmark exists for each category of consumers. Instead, for RLNG consumers, OGRA has now assumed separate benchmarks of 0.38% for Transmission and 6.3% for Distribution.

OGRA therefore has effectively reduced consolidated UFG benchmark of RLNG to 2% only as against around 7% for natural gas consumers. It is pertinent to mention that the above unsolicited intervention by OGRA may render RLNG supply chain unviable and may jeopardize long term G to G LNG supply arrangements.

It is highlighted that under Petroleum Levy Ordinance, the mandate to determine and impose a UFG benchmark in case of RLNG doesn’t rest with OGRA unlike the natural gas pricing which is done pursuant to OGRA Ordinance. The company is contesting the matter on relevant forums, both factually and legally.— PRESS RELEASE