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SNGPL blames domestic and fertilizer industry for high circular debt


ISLAMABAD: Sui Northern Gas Pipeline Limited (SNGPL) has blamed fertilizer industry and domestic consumers are key contributors for rising circular debt. The SNGPL circular debt will touch Rs 575 billion by next month.

Over the years due to decline in gas reserves with increasing share of domestic and fertilizer sectors, the cross subsidy generated fell short by nearly Rs 350 billion during the last seven years. The gas company further stated that the PSO is supposed to place order for spot procurement at least 120 days in advance whereas the major RLNG consuming sector, i.e., power usually does not convey firm demand at the start of the year. Even the given demand is frequently changed by Power Division during the year which is a major caveat in assessing accurate RLNG demand. Similarly, during winters, gas requirement of domestic consumption abruptly increases depending upon severity of weather and hence diversion volume cannot be assessed such a long period in advance.

Our upstream RLNG supply contracts are on 100% firm take or pay basis whereas downstream RLNG supply to Government Power Plants (GPPs) was on 66% take or pay basis which has also been eliminated from start of year 2022 as per the ECC decision. RLNG supply to other power plants, fertilizer, CNG and industrial sector are on as available basis.

SNGPL further contended that demand supply issues in LNG supply chain can only be addressed with back-to-back firm contracts all the way from upstream LNG suppliers to downstream consumers. As regards, new policy for allocation of indigenous gas and RLNG, SNGPL said this is the purview of MoE.


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