The federal cabinet has approved RLNG sale pricing mechanism for Karachi Electric (KE) in accordance with the proposal of Petroleum Division, well informed sources told Business Recorder.

The Economic Coordination Committee (ECC) of the cabinet, in its meeting held on February 9, 2022 accorded approval of the summary.

The sources said in order to enable Pakistan Petroleum Limited (PLL) to supply RLNG to KE’s 900 MW power plant and finalise its RLNG sale transaction the following proposals were submitted for consideration and approval of the ECC: (a) Amendment to the Second Schedule of Petroleum Products (Petroleum Levy) Ordinance,1961: (i) pursuant to Section 7 of the Petroleum Products (Petroleum Levy) Ordinance, 1961, Federal Government, except for Fifth Schedule, can amend the schedules of the Ordinance by notification in official gazette, therefore, name of PLL may be included in the Second Schedule of Ordinance and Ogra may be delegated the power for establishing/administrating RLNG price on behalf of PLL as per the draft SROs duly vetted by Law Division; (b) determination of Sale Price of LNG; (ii) LNG DES price to be taken as per contract(s) as per existing guidelines; (iii) PLL’s LNG import related costs and port charges to be taken at actual as per the existing guidelines; (iv) PLL’s margin on LNG to be taken as per the existing guidelines.

All the charges under Operation Services Agreement (OSA) including but not limited to capacity charges, utilization charges of Terminal as well as retainage to be taken at actual as per the existing guidelines; (v) Terminal management fee at actual as per the existing guidelines; (vi) costs associated with interconnection agreement between PLL and SSGCL to be taken as per the agreement; (vii) any other costs under the GSA between KE and PLL to be taken as per the agreement including Operation and Maintenance (O&M) fee for the metering setup; (viii) costs associated with the issuance of performance security by PLL to KE under Heads of Agreement (HA), and (ix) transmission loss to be determined and charged at actual as per existing guidelines of RLNG.

Ogra supported the proposed amendments, subject to vetting by the Ministry of Law & Justice, and agreed to the condition that the cost should be rationalized and should not be charged twice to the existing consumers. The Finance Division also endorsed the views of the Ogra.

The story was originally published in Business Recorder on January 20, 2022.