SNGPL to double RLNG rollout after strong demand in Pakistan

Sui Northern Gas Pipelines Ltd. plans to sharply expand its rollout of re-gasified liquefied natural gas (RLNG) connections after receiving strong customer demand in the opening months of the fiscal year, company officials said Wednesday during a corporate briefing.

The state-run utility said it aims to install 300,000 RLNG connections in fiscal 2025-26 and ramp up to 600,000 connections annually in subsequent years.

Its management said RLNG costs about 30% less than liquefied petroleum gas (LPG) and offers greater safety and convenience. The company has already provided about 50,000 RLNG connections in the past two months, reflecting what it called a “healthy response”.

Executives said two RLNG cargoes will be diverted each month and that they expect a reduction in forced curtailment as supply from local exploration and production fields improves.

The company also addressed issues related to unaccounted-for gas (UFG). The management said the distribution benchmark for UFG remains 6.25%.

The Oil and Gas Regulatory Authority (OGRA) assesses performance using 31 key monitoring indicators, and based on last year’s results, allowed a 1.22% adjustment factor. SNGPL’s UFG rose to 5.27% in FY25 from 4.93% in FY24, which officials attributed mainly to a 65 billion cubic feet reduction in gas offtake by the power sector and captive power plants. Without that drop in demand, management said, UFG would have been 4.73%.

On the regulatory front, the company said OGRA’s latest ruling on the real effective exchange rate allows 75% of working capital finance costs for RLNG, up from 50%. Nearly all costs were approved in the last final revenue requirement determination except PKR 2 billion, and officials said they expect that amount to be cleared in next year’s ruling.

Profitability slipped to PKR 14.6 billion in FY25, down from PKR 19 billion a year earlier, as the regulated return on assets fell to 21.25% from 26.22% following a decline in interest rates. Management said dividend payouts have temporarily decreased due to the circular debt crisis but should recover once the issue is resolved. KPMG has been hired as advisor on the matter.

Officials also said they do not expect changes to the fixed-rate regime as OGRA reviews its return-on-assets framework.

SNGPL highlighted two major projects: the PKR 28 billion Palak gas project, which will add 45 million cubic feet per day to the system, and a PKR 27 billion network augmentation program for Rawalpindi and Islamabad.