Ogra-determined rates: CCoE set to allow SNGPL, SSGCL to provide RLNG connections

ISLAMABAD: The Cabinet Committee on Energy (CCoE) is set to allow Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) to provide Re-gasified Liquefied Natural Gas (RLNG) connections to pending applicants at Oil and Gas Regulatory Authority (OGRA)-determined rates, sources close to Petroleum Minister told Business Recorder.

The CCoE meeting, chaired by Prime Minister Shehbaz Sharif, was scheduled for Thursday (August 28, 2025) but was postponed due to the premier’s visit to flood-affected areas.

Petroleum Minister, Ali Pervaiz Malik has just returned from Qatar, after presenting revised LNG cargoes aimed at reducing burden on Pakistan. Qatar has conveyed that it would respond to Islamabad, after internal consultations.

Ogra ups RLNG rate for SNGPL, SSGC

According to documents, the CCoE in December 2022 approved the completion of incomplete gas development schemes (2013–18) but declined to lift the moratorium on new indigenous gas connections owing to severe supply shortages. Instead, the federal cabinet allowed RLNG-based connections for industry, commercial consumers, and new housing societies/colonies, provided the cost of dedicated pipelines was borne by consumers.

On this basis, the Sui companies have so far provided 33,808 RLNG-based connections. However, they now face a massive backlog: about 150,898 fresh RLNG applications are pending (136,903 with SNGPL and 14,086 with SSGCL). By contrast, SNGPL alone has a pendency of 3.2 million applications for indigenous gas connections, of which 240,000 applicants have already deposited payments and about 4,000 have paid the urgent connection fee of Rs 25,000. SSGCL has 19,797 similar pending cases.

Officials said the companies have refrained from offering RLNG to applicants already in the indigenous gas queue to avoid potential litigation over tariff discrimination. However, they argued that formal, voluntary contracts between consumers and utilities could minimize this risk.

The broader context is a glut of imported LNG. Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL) are bound by long-term contracts with Qatar Energy and ENI, importing around 10 cargoes per month (1,000 mmcfd). These contracts carry strict “take-or-pay” clauses, requiring Pakistan to pay for contracted volumes regardless of demand.

Originally, LNG imports were meant to fuel efficient power plants, assumed to rank high in the Economic Merit Order (EMO) or operate as must-run plants for peak demand. But cheaper power generation options became available, reducing LNG uptake in the power sector. At the same time, captive power producers (CPPs) cut back LNG consumption following the imposition of the grid transition levy.

Consequently, SNGPL now faces a surplus: 11 cargoes are expected to remain unused between July and December 2025, while about 40 more may be surplus during 2026. To manage the oversupply, the company has been compelled to divert costly RLNG to the domestic sector.

The government’s expected approval of RLNG connections for pending applicants is being viewed as a measure to absorb surplus supplies, though concerns remain over the affordability gap between RLNG and indigenous gas tariffs.

Copyright Business Recorder, 2025