LAHORE: Pakistan LNG Limited (PLL) has warned the Ministry of Energy (MoE) of massive disruption in the liquefied natural gas supply chain in near future if Rs6.5 billion payments are not released by the Sui Northern Gas Pipelines Limited (SNGPL).

The PLL, which already defaulted with the United Bank Limited (UBL) for LNG supply payment last week, has in a recent communication to the MoE complained that the SNGPL has failed to release payment on an urgent basis despite repeated requests.

“Please refer to our letter No. PLL/FA/2021/01/25-01 of Jan 25, 2021 and subsequent follow up with SNGPL for settlements of receivables on an urgent basis to avoid LNG supply chain defaults,” reads the letter PLL Managing Director Masood Nabi wrote to Special Secretary MoE (Petroleum Divi­sion) Nadeem Irshad Kiyani recently.

The SNGPL receivables currently stand at Rs61.2bn. Despite PLL’s request for urgent release of payments, SNGPL has not released sufficient payments to meet LNG supply chain commitments, the company said.

The letter mentions that the PLL has already defaulted with UBL for LNG supply payment on Feb 3. In the event the default is not cleared, UBL will not establish LCs (Letter of Credits) for upcoming LNG cargoes. Furthermore, the PLL has not paid custom duties for one LNG cargo amounting to Rs800 million with another payment of Rs4bn payable to LNG supplier on Feb 9. The PLL requires an urgent release of Rs6.5bn immediately in order to avoid potential disruption in the LNG supplies chain and seeks immediate intervention.

Talking to Dawn, a senior official source in the ministry said the issue behind delay in release of payments does not exist on the part of the SNGPL alone, as the Sui Southern Gas Company Limited (SSGCL) took is also to make payments to the PLL. “As the SNGPL receivable stands at Rs61.2bn, the SSGC’s receivable too is amounting to Rs50bn or so approximately,” the official requesting anonymity added.

He said since the SNGPL’s receivable from the domestic consumers ranged up to Rs80bn, it recently paid Rs5bn to both PLL and the Pakistan State Oil. But the payment of Rs6.5bn to the PLL is not possible on urgent basis since it depends on receipt of payment of monthly bills from the consumers. Similarly, the SSGC has made some partial payments to the PLL recently, he added.

Published in Dawn, February 11th, 2021