OGRA raises RLNG prices by up to 15.3% for October as higher crude costs feed through
Pakistan’s gas regulator has raised regasified LNG prices by up to 15.3 per cent for October for the two Sui companies, reversing a September cut and pointing to higher power generation costs.
Pakistan's gas regulator has raised the price of regasified liquefied natural gas (RLNG) by up to 15.3 per cent for October, reversing part of the relief consumers received the previous month and adding fresh pressure to energy costs heading into winter.
The Oil and Gas Regulatory Authority (OGRA) notified the revised prices on Friday for sales at the distribution stage by the country's two Sui gas companies, attributing the increase mainly to higher crude oil prices in international markets. The adjustment applies to October supplies and follows a reduction of about 20 per cent in September, making the latest move a sharp swing back upwards within two months.
Under the notification, the sale price for Sui Northern Gas Pipelines Limited (SNGPL), the Lahore-based company that serves Punjab and Khyber Pakhtunkhwa, rose by 14 per cent at the distribution stage to 17.33 dollars per million British thermal units (mmBtu), up from 15.196 dollars in September. At the transmission stage, its price increased by 13.9 per cent to 15.94 dollars per mmBtu, compared with 13.99 dollars a month earlier.
The increase was slightly larger in the south. For Sui Southern Gas Company Limited (SSGCL), the Karachi-based utility supplying Sindh and Balochistan, the transmission-stage price rose by 15.25 per cent to 14.53 dollars per mmBtu from 12.611 dollars in September, while the distribution-stage price climbed by 15.27 per cent to 16.396 dollars per mmBtu, up from 14.22 dollars.
The regulator's figures show that the average delivered price of liquefied natural gas (LNG) cargoes, measured ex-ship, stood at 10.75 dollars per mmBtu in October, up from 10.06 dollars in September. That is still well below the 12.12 dollars recorded in August and the 18.96 dollars seen in July, underlining how volatile imported gas prices have been through the year even as the month-on-month direction has now turned upwards again.
The October basket price was based on two cargoes, both sourced from Qatar under long-term contracts priced at 13.37 per cent and 10.20 per cent of the Brent crude benchmark respectively. Because RLNG prices in Pakistan are linked to crude benchmarks through these contracts, movements in global oil prices feed directly into the gas bills of power producers, industry and other bulk consumers.
One striking feature of the notification is the gap between the price of the gas as it arrives and the price at which it is finally sold. The distribution prices of 16.396 dollars for SSGCL and 17.33 dollars for SNGPL sit about 6.58 dollars and 5.65 dollars respectively above the average delivered price of 10.75 dollars. That difference reflects margins charged by the two LNG importers, Pakistan State Oil and Pakistan LNG Limited, as well as port charges and retainage and margins set at 3.77 per cent of the delivered price.
System losses on the two networks also featured in the regulator's workings. SSGCL reported distribution-stage losses of 12.55 per cent, compared with about 10.6 per cent a year earlier, while SNGPL's losses stood at almost 9 per cent, against 7.47 per cent in October last year. Higher losses mean a larger share of gas is unaccounted for before it reaches paying consumers, and the cost is spread across the network.
The most immediate consequence is likely to be felt in electricity generation. The regulator's assessment indicates the increase will have a significant impact on the fuel cost of power generation in December. RLNG-based generation cost about 40 rupees per unit in September, based on an average import price of 10.06 dollars per mmBtu, so the higher October import price of 10.75 dollars points to a further rise in generation costs in the months ahead.
For households and businesses, the notification lands at a sensitive moment, with short-term inflation already running above 11 per cent and fuel prices elevated. RLNG is a major input for power plants and industry, and its price movements tend to work their way through the economy over time, whether through electricity tariffs, industrial costs or the broader cost of doing business. The regulator has not announced any further change for November, leaving consumers and producers to watch global crude prices and the next monthly notification for the direction of gas costs.
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