RLNG pricing: Ministry proposes amendment to law
Ministry of Petroleum has proposed to the Economic Co-ordination Committee (ECC) of the Cabinet to amend Schedule-1-II of Petroleum Product (Levy) Ordinance instead of the Oil and Gas Regulatory Ordinance to fix RLNG price on a monthly basis, it was learnt Sources told Business Recorder that Ogra has suggested an amendment to the Petroleum Products (Petroleum Levy) Ordinance 1961 (PL Ordinance) to declare the RLNG as a petroleum product as then its pricing can be done in line with prevailing practice for petrol pricing on a monthly basis.
Copyright Business Recorder, 2015
A senior official of Finance Ministry told Business Recorder that a committee constituted by the last meeting of the ECC on sale price of RLNG submitted its proposal on Thursday. A copy of the report submitted to the ECC available with Business Recorder reveals that the Committee held its meeting in Finance Division 9th April 2015. The meeting attended by all the members of the committee-Secretary Petroleum, Secretary Finance, members Gas OGRA and members Law, Justice and Human Rights - to discuss the issue of determination of sale price of RLNG. The committee accepted the suggestion of Executive Director (Litigation) Ogra to amend the Petroleum Product Ordinance (levy) 1961 instead of amending the Ogra Ordinance to declare RLNG as a petroleum product. The committee meeting was informed that in the context of the PL Ordinance, the petroleum products mean the products included in schedule-1 to the PL Ordinance and the federal government is empowered to amend all schedules of the Ordinance, except the fifth schedule which provides for rates of PL on various petroleum products. The meeting decided Ogra may draft the requisite notification while detailed ''policy guidelines'' on components of sale price of RLNG will be issued separately.
The meeting agreed to amend the Schdule-1 to include RLNG as a petroleum product and the Schedule- 2 to include SNGPL/SSGC as companies. The draft notification for vetting of Law, Justice and Human Rights Division in the light of present legislative framework and approval of the federal government was also placed before the ECC. Sources said that on the issue of non-operating incomes, the committee meeting decided that cost of service (transmission & distribution) must be treated as operating income as it would not be expedient to charge the same under this ring-fenced arrangement as well as a part of normal revenue requirements.
The committee also agreed that in case of ring fencing, any makeup volume due to BTU equivalence may be treated as "deemed delivery/sales" in the unaccounted for gas (UFG) computation less UFG of transmission/ distribution as allowed by the OGRA being an operational constraint.