Industrial sector: PAC steps up pressure on Ogra, SNGPL for Rs51.3bn recovery

ISLAMABAD: The long-running dispute over Re-Gasified Liquefied Natural Gas (RLNG) pricing took a sharp turn on Thursday as the Public Accounts Committee (PAC) intensified pressure on the Oil and Gas Regulatory Authority (OGRA) and Sui Northern Gas Pipelines Ltd (SNGPL) to recover Rs51.3 billion from the industrial sector.

The controversy centers on retrospective bills dating back to 2015, recalculated amid regulatory delays and pricing inconsistencies that have affected the energy sector for over seven years.

An audit by the Auditor General of Pakistan (AGP) revealed a pattern of delays, noting that OGRA repeatedly failed to finalize RLNG prices on time.

Ogra ups RLNG rate for SNGPL, SSGC

This has resulted in an unsettled cost backlog of Rs103 billion. Meanwhile, state importers Pakistan State Oil (PSO) and Pakistan LNG Ltd (PLL) paid international suppliers upfront but faced difficulties recovering these costs from SNGPL, leading to reliance on expensive commercial borrowing.

During a meeting of the PAC, the AGP warned that a significant portion of these costs may remain unrecovered, posing risks to the financial stability of the country’s gas sector – concerns that were reiterated during recent PAC hearings.

OGRA’s initial attempt to finalize prices for the disputed period in December 2024 was withdrawn following pressure from PSO and PLL.

Revised prices covering seven years were reissued in March 2025. SNGPL’s plan to recover the resulting price differences in a single billing cycle sparked strong opposition from industrial consumers.

These consumers rejected the retrospective billing and demanded refunds totaling approximately $442 million, citing disputes over adjustments related to unaccounted-for gas (UFG) and the fairness of the process.

OGRA Chairman Masroor Khan defended the regulator’s approach before the top parliamentary watchdog, stating that provisional monthly prices were regularly set and that differences were recoverable through future bills under existing agreements, though not as a lump sum.

Industrial consumers remain unconvinced and have filed formal objections, delaying the recovery plan initially scheduled for mid-August.

The issue dates back to 2015 when the federal government placed RLNG pricing under the petroleum framework following the commencement of LNG imports.

The Economic Coordination Committee (ECC) assigned OGRA responsibility for setting provisional monthly prices, subject to adjustment after final cost verification.

However, ongoing delays and a lack of transparency have compounded financial and operational challenges in the sector.

Copyright Business Recorder, 2025