RLNG soars to record level after 32% price increase

Consumers are set to face another energy price shock after the Oil and Gas Regulatory Authority (OGRA) raised regasified liquefied natural gas (RLNG) prices to their highest level on record for August, while keeping lower natural gas costs from reaching households.

OGRA increased RLNG prices by about 32 percent for August, setting the rate at $25.83 per mmBtu for Sui Northern Gas Pipelines Limited (SNGPL) and $25.09 per mmBtu for Sui Southern Gas Company Limited (SSGCL). The revised rate works out to roughly Rs7,204 per mmBtu.

The sharp rise follows a 15 percent increase in July and means RLNG prices have surged almost 148 percent since February, when they stood at $10.45 per mmBtu.

The latest hike was driven by five LNG cargoes purchased from the spot market after Pakistan failed to secure shipments from Qatar because of supply disruptions linked to the US-Iran conflict.

Higher RLNG prices are expected to push up electricity generation costs. The impact has already started to show, with RLNG based power generation fuel costs climbing to Rs31 per unit in May from Rs13.72 per unit in April.

OGRA also raised liquefied petroleum gas (LPG) prices by 5.4 percent for August. The new price has been fixed at Rs254.32 per kilogram, up from Rs241.43 per kilogram in July.

At the same time, the regulator disclosed that it had reduced the prescribed revenue requirement for gas utilities by Rs134 per mmBtu, creating savings of about Rs50 billion. Instead of passing the benefit on to consumers through lower gas tariffs, the amount will be used to reduce the gas sector’s circular debt, which has reached around Rs3.5 trillion.

The government has yet to announce consumer gas tariffs for the current fiscal year, despite rules requiring revised rates to take effect from July 1. Officials have indicated that end user gas prices will remain unchanged, with the savings redirected towards improving the financial health of the gas sector.

For the current fiscal year, OGRA has approved a combined revenue requirement of about Rs817 billion for the two gas companies, including Rs501 billion for SNGPL and Rs315.8 billion for SSGCL.