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RLNG: SNGPL Clarifies Its Position Regarding Overburdening of Consumers

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LAHORE– This refers to news items printed in some newspapers regarding burdening of Rs350 billion to RLNG consumers. In this context, we wish to apprise that these news items have been published without taking SNGPL position on the matter.

For the benefit of the readers it is informed that the RLNG pricing mechanism was approved by the ECC of the cabinet in 2016 wherein it was decided that RLNG sale will be a ring-fenced activity and its price will be determined by OGRA in line with the policy guidelines issued by the Federal Govt.

Under these guidelines the Federal Govt. advised OGRA that while determining monthly RLNG price they would apply two separate UFG benchmarks for transmission, where mostly power sector consumers fall, and distribution segment consumers, where retail industrial and CNG consumers are served.

Transmission segment was advised to be charged a maximum of 0.5% UFG benchmark while for the distribution segment, actual UFG of the company as determined by OGRA for the preceding year, has to be taken as a benchmark.

It is pertinent to mention here that in the system gas sector only one UFG benchmark of about 7% is considered in the entire network i.e. both for transmission and distribution and at the end, consumer prices cover uniform benchmark for transmission and distribution consumers.

In fact one unified benchmark for indigenous gas pricing is in vogue since 2003-04 which ensures that lower transmission losses compensate for higher distribution losses owing to gas being supplied to far flung and law and order affected areas. UFG for law and order affected domestic consumers goes up to 90% while the same is also much higher than the benchmark for domestic consumers.

In case of RLNG pricing, the objective of segregating and setting a lower UFG benchmark for transmission segment consumers was to pass on a minimum possible cost to the electricity end consumers which is the biggest single consumer of RLNG. Had a uniform benchmark of about 7% been fixed for the whole RLNG sector i.e. both for transmission and distribution consumers, the cost of UFG for five years period would have been Rs. 105 billion as against Rs. 55 billion which has been accounted for under the current mechanism of two separate bench marks. So in fact the current UFG benchmark for RLNG is much more stringent than the System Gas UFG benchmark and is being wrongly criticized by certain segments for their own ulterior motives.

In the light of the above, it is concluded that by issuing policy guidelines in respect of application of two separate benchmarks for transmission and distribution consumers, the federal government has in fact provided an estimated benefit of Rs. 65 billion to the electricity end consumers.— PRESS RELEASE