Reducing RLNG costs: lessons from regional strategies

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LAHORE: Pakistan’s regular liquid natural gas (RLNG) tariffs for the industrial sector are higher than other imported countries, such as India and Bangladesh. This disparity is driven by long -term contract responsibilities, important system losses and infrastructure challenges, all affect export competition.

As of November 2024, the Oil and Gas Regulatory Authority (OGRA) has made RLNG prices in Pakistan $ 13.06 per million British thermal units (MMBTU) and SUI Northern Gas Pipelines Limited for transmission. (SNGPL) is fixed for division .0 14.01 per MMBTU. For SUI Southern Gas Company Limited (SSGCL), rates were $ 11.89 per MMBTU for transmission and distribution .5 13.58 per MMBTU. These rates increased by increasing international prices and system losses, which were recorded at 9.65 % for SNGPL and 13.14 % for SSGCL.

In India, RLNG prices are active, which is influenced by global market trends and domestic policies. By mid -2023, prices were between $ 10 and $ 12 per MMBTU. India benefits from a diverse import strategy, combining long -term contracts with spot purchases, which allow more competitive pricing. On the other hand, Bangladesh relies heavily on long -term contracts for RLNG imports. In 2023, its average RLNG import price was between MM 11 and $ 13. However, the country has struggled with the benefit of prices fluctuations and limited negotiations in the global market.

Pakistan’s factors are the main disadvantages of the system-called Gas (UFG) without calculation-RLNG prices. As of August 2024, the losses were recorded at 9.65 % for SNGPL and 13.14 % for SSGCL. The cost of bringing these losses to a global standard of 2-3 % can be reduced substantially. In order to solve this problem, investment is needed to monitor pipeline, detect leaks and replace old infrastructure.

Many factors play an important role in displays RLNG prices in Pakistan, India and Bangladesh. Long -term contracts provide stability in prices, but when global prices fall, it can be detrimental. India’s strategy to balance long -term contracts with the spot market purchases offers more flexibility and cost. Bangladesh, with strong dependence on long -term contracts, often loses low prices. Infrastructure RLNG plays an important role in pricing. Effective port facilities, storage capabilities and distribution networks help to reduce costs, while obstacles in these areas can lead to higher prices. In Pakistan, the tax and charges imposed by the government on RLNG, including customs duties and surcharges, increase the costs. These prices vary on the basis of decisions and are subject to review from time to time. In India, the import of LNG is usually subject to customs duties, though discounts or reductions are sometimes introduced to support the energy sector. In Bangladesh, RLNG imports are taxed, rates are adjusted according to financial policies and energy requirements. These tax structures, together with other Levies, directly affect the last price of RLNG in each country.

To reduce RLNG costs, Pakistan should adopt a more balanced approach. Instead of relying too much on expensive long-term LNG contracts, the country should follow India’s model, and get 50-60 % of RLNG through long-term contracts during the remaining purchase in the spot market. – Strict long -term contracts should also include prices review methods to be compatible with the global market volatility. Increasing the pond of suppliers will further strengthen Pakistan’s bargaining power.

Strict implementation against gas theft and improvement of transmission infrastructure must be relieved of system losses. Pakistan’s LNG terminals currently work at full capacity, which restricts flexibility in imports. Increasing the terminal capacity will allow more space purchases at a lower price. Private sector participation in LNG terminals, as India has done, can improve the effectiveness of performance and cost. The establishment of strategic gas reserves will also enable Pakistan to buy RLNG at low prices and storage future use, which will reduce dependence on high -cost emergency purchases. Tax reform is another key sector for improvement. High import duty, GST, and other allegations increase the final cost for consumers. Reducing these taxes, especially industrial use, will increase competition. Advanced planning and flexible purchase strategies will also help prevent the increase in prices, as Pakistan often buys RLNG at the rates that are often in shortage. Purchase Alternative Strategies, such as commodity conversion – where agricultural products like rice are traded for LNG, as Bangladesh has discussed with Qatar – foreign exchange pressure and low costs more Can reduce

A combination of these measures will allow Pakistan to make RLNG more affordable, improve industrial competition and increase energy safety.