Short on commitment with SNGPL: Power sector uses 28pc less RLNG

ISLAMABAD: Pakistan’s power sector consumed 28 percent less Regasified Liquefied Natural Gas (RLNG) in June 2025 compared to its committed volumes with Sui Northern Gas Pipelines Limited (SNGPL), creating operational and financial challenges for the gas supplier, sources told Business Recorder.

According to sources, SNGPL has been persistently flagging the issue to both the Directorate General of Gas (Petroleum Division) and the Power Division.

In a recent communication, SNGPL reiterated that the power sector is not consuming RLNG as per the committed demand of 550 million cubic feet per day (MMCFD) for June 2025. Actual average consumption has been around 396 MMCFD, leading to excess gas accumulation in the system.

Power sector owes Rs165.256bn to SNGPL

SNGPL warned that if RLNG offtake is not increased immediately to meet the agreed demand, high system pressures could disrupt re-gasification operations at both LNG terminals. This could delay cargo discharge and result in financial losses due to demurrage charges and take-or-pay obligations. As an alternative, the company may be forced to curtail supplies from local gas fields.

SNGPL requested the Directorate General (Gas), Petroleum Division, to intervene urgently and engage the Power Division for immediate RLNG offtake as per commitments, along with recoupment of unutilized volumes. This is necessary to ensure smooth system operations.

The National Power Control Centre (NPCC), now operating as the Independent System and Market Operator (ISMO), is responsible for dispatching power plants based on the Economic Merit Order (EMO). However, in several cases, ISMO has deviated from the EMO due to unforeseen or scheduled outages of various plants.

ISMO maintains that partial loading of plants is in line with provisions of their respective Power Purchase Agreements (PPAs), and that operational decisions are made accordingly.

Nevertheless, the NPCC’s General Manager often faces criticism during NEPRA public hearings for bypassing cheaper, locally fueled power plants in favor of more expensive RLNG-fired units, especially to meet peak demand in Central Punjab.

During these hearings, stakeholders proposed that ISMO publish real-time data on generation mix and associated fuel costs to enhance transparency and support informed decision-making.

As per the Economic Coordination Committee (ECC) decision of March 19, 2025, the minimum take-or-pay obligation was revised to 50 percent starting January 1, 2025. This adjustment will be applied from May 2025 onwards, as agreed during a meeting of the Power Task Force.

In his additional note on Distribution Companies’ (Discos) Fuel Cost Adjustment (FCA) determination for April 2025, Member (Technical) Rafique Ahmad Shaikh highlighted that forced outages at cost-effective plants—such as Uch-I and EngroPowerGenQadirpur—during peak demand periods led to underutilization of economical, indigenous resources.

He noted that this has increased reliance on expensive power generation and driven up overall fuel costs. While legally permissible, repeated forced outages negatively affect FCA calculations. To improve accountability, he recommended that the System Operator present a detailed financial impact assessment of these outages during FCA meetings, including a three-year history of forced and scheduled outages for each affected plant to evaluate operational performance.

Shaikh also pointed out that Partial Load Adjustment Charges (PLAC) amounted to Rs. 2.92 billion ($10.39 million) in April 2025 alone, bringing the cumulative total for FY 2024–25 to Rs. 32.8 billion ($116.73 million). This rising cost is concerning and requires a detailed review. He urged the development of a mechanism to reduce PLAC through better demand-side management and system optimization.

In related developments, Pakistan LNG Limited (PLL) has diverted six additional LNG cargoes—originally scheduled for delivery from Italian supplier ENI in July through December—to the international spot market. These diversions come under a 15-year agreement stipulating one cargo per month.

Pakistan has also deferred the delivery of five LNG cargoes from Qatar — originally scheduled for 2025 —to 2026, citing reduced domestic demand.

Copyright Business Recorder, 2025