Textiles hit regulator against high RLNG bills

Textile mills have hit out at the regulator and a public gas utility over billing incidents related to the supply of regasified liquefied natural gas (RLNG) to captive power plants, saying their actions have burdened consumers with exorbitant costs.

The All Pakistan Textile Mills Association (Aptma) has submitted a report to the Oil and Gas Regulatory Authority (Ogra) regarding the final selling prices of RLNG to consumers of Sui Northern Gas Pipelines Limited (SNGPL) from April 1, 2015 to June 30, 2022.

The regulator recently held a public hearing. Aptma members argued that since LNG offloading started in Pakistan, its selling prices had been issued on a provisional basis with the expectation of short-term adjustment.

“These deals should have been routine and timely, month-to-month or quarter-to-quarter, but instead they accumulated over many financial years,” the millers said.

When they finally materialized, they appeared as a bulk charge rather than a phased schedule. Several years of disputes have been folded into current accounts, turning a technical accounting exercise into a liquidity crisis for power producers, industrial users and operators of compressed natural gas (CNG) stations, they said.

In practice, the businesses were sold electricity, natural gas/RLNG, freight and transport fuel based on then prevailing tariffs. Aptma emphasized that they would not be able to retroactively reroute these transactions according to the 2025 costs. However, the joint venture sought to reopen the earlier periods with a single scan. From mid-2023, natural gas tariffs for captive energy have been increased from Rs 1,100 per million British thermal units (mmBtu) to Rs 3,500 per mmBtu, with a new grid connection fee of Rs 791, bringing the effective price to around Rs 4,291 per mmBtu ($15.4).

At this time of intense industrial stress, Ogra for the first time identified realized RLNG covering the period from April 1, 2015 to June 30, 2022. Subsequently, SNGPL compounded the problem by charging arrears for this period of 84 months in a single cycle.

“What should have been routine monthly agreements for seven years became a one-off retrospective charge, causing a severe liquidity shock and threatening the viability of entire sectors,” it said.

“For energy-intensive industries, the effect is devastating, exacerbating working capital shortages.”