Govt Announce Reduction in CNG Price by Rs7.5/liter in Punjab, Islamabad

The government has slashed price of Re-Gasified Liquefied Natural Gas (RLNG) price from June 2020 by 18.4 percent for Sui Northern Gas Pipelines Limited (SNGPL) and 19.1 percent for Sui Southern Gas Company (SSGC) over the previous month following a sharp decline in international crude oil price.

After this cut by government in RLNG prices, the All Pakistan CNG Association (APCNGA) on Sunday also announced Rs7.5 per liter cut in CNG prices for Punjab and Islamabad with immediate effect. The new price will be now Rs64.5/liter. The cut has been made, as CNG stations in these areas are fed through RLNG. For May 2020 too, it had slashed CNG prices by 12.5/liter in these areas.

It is worth mentioning that the government for June had also reduced petrol price by Rs7.06 per litre, Kerosene Rs11.88 per litre and light diesel oil (LDO) by Rs9.37 per liter. The reduction in imported fuel price would have a positive impact on curtailing inflationary pressure on the economy.

Since, RLNG is the major contributor to power generation after hydel sources, with the decline of the RLNG prices, the cost of energy will also reduce and the benefit is likely to be passed on to power consumers.

Independent economists believe that substantial reduction in energy cost will help boost industrial sector’s performance by reducing their cost of production and also bring down the general inflation. They said that the government should exploit this opportunity of low international energy price and also pass its positive impact on to industrial and other sectors as to help boost the economy.

It is worth mentioning that headline inflation during May 2020 has been clocked in at 8.2 percent and economist believe that with further cut in energy costs and reducing supply side constraints in food items, the inflation in June 2020 can touch a little more than 7 percent.

The Oil and Gas Regulatory Authority (Ogra) notified the RLNG prices by setting the new prices at $6.1284/mmbtu for consumers of SNGPL and $6.2716 for SSGC. Last month, the RLNG price for SNGPL was $7.5105/mmbtu and $7.7521/mmbtu for SSGC.

For May 2020 too, the government had slashed the RLNG prices by 21.63 percent for SNGPL and 18.9 percent for SSGC.

The new notified prices of RLNG also include charges of the LNG terminals, transmission losses, port charges, and margins of the importers i.e. Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL).

The new weighted average sale prices of RLNG have been computed based on the nine cargoes imported in the month including six cargoes by PSO and three by Pakistan LNG.

LNG is an imported product and remains pegged with the international oil prices. With the drop in oil price in the international market, local RLNG price goes down and benefit the domestic and industrial sectors.

Demand from the world’s biggest buyers of liquefied natural gas (LNG) has plunged, dragging Asia’s spot prices to record lows and forcing some suppliers to start cutting output. Asia’s spot LNG prices dropped to $1.85 per million British thermal units (mmBtu) last month, the lowest ever, as cargoes have flooded the market.

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