Legal framework and contractual obligations for the supply of Regasified Liquefied Natural Gas (RLNG) to new housing societies and colonies

 The above-mentioned framework is crucial for understanding the regulatory and operational procedures set by the Oil and Gas Regulatory Authority (OGRA) and the Ministry of Energy (Petroleum Division) of Pakistan. Below is a detailed analysis of the key elements and their legal significance.

Legal and Regulatory Framework

OGRA Approval and Policy Directive: The document begins with a directive from OGRA, dated 5th September 2019, approving the RLNG contract for domestic use by consumers in new housing societies and colonies. This approval follows a due process and public consultation, indicating compliance with procedural requirements. The Federal Cabinet’s policy, established in April 2017, mandates the provision of RLNG connections to new housing societies under a ring-fenced arrangement. This policy ensures that the volume and pricing of RLNG are managed separately from the natural gas supplied at indigenous tariffs, preventing cross-subsidization and ensuring economic viability.

Key Policy Provisions:

1. Ring-fenced Arrangement: This requires the Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) to manage RLNG volume and pricing distinctly from other gas supplies.
2. Restriction on Existing Localities: The policy prohibits providing RLNG connections to existing housing colonies where consumers are already receiving natural gas at the indigenous tariff, ensuring no overlap and potential tariff conflicts.
3. Mandatory Reporting: The gas companies must keep OGRA informed about new RLNG connections, detailing the housing society’s name, RLNG load requirements, consumer numbers, and contract details.

Contractual Obligations

Consumer Agreement: The contract between the gas company (referred to as the “Company”) and the consumer outlines several terms and conditions to ensure clarity and mutual understanding. The key components include:

1. Security Deposit:
   • A refundable deposit of Rs. 15,000 is required from new RLNG domestic consumers. This deposit is adjustable based on the consumer’s average consumption pattern over three months.
2. Service-line Charges:
   • Non-refundable charges based on the size of the property. For example, Rs. 1,500 for properties up to 10 marlas (300 sq. yards) and Rs. 3,000 for larger properties.
3. Pricing and Billing:
   • Consumers are billed at rates notified by OGRA. If prices are revised retroactively, the differential is adjusted in subsequent bills.
   • Minimum charges apply if consumption falls below a certain level.
4. Meter Rent:
   • Consumers must pay a monthly meter rent, subject to revisions with OGRA’s approval.
5. Other Charges:
   • Consumers are liable for all government-imposed taxes and charges.
6. Gas Meter and Company Property:
   • The gas meter and associated fittings provided by the Company remain its property. Consumers are responsible for the safety and maintenance of these installations.

Operational Provisions

Installation and Maintenance:

• The internal piping (houseline) must be installed and tested by licensed contractors or the Company’s representatives. The Company reserves the right to inspect these installations to ensure compliance with safety standards.
• The gas meter is usually installed at the property boundary, and consumers must provide alternate locations if necessary, at their own expense.

Meter Inspection and Accuracy:

• The Company’s representatives are authorized to inspect, adjust, or exchange meters. The accuracy of the meter is crucial, and disputes over meter readings can lead to adjustments based on prior consumption patterns.

Billing:

• Gas bills are issued monthly, and consumers must pay promptly. In cases of meter failure, bills are estimated based on past consumption.

Legal and Practical Implications: The outlined contractual framework ensures a structured and transparent approach to RLNG supply. By delineating the roles and responsibilities of both the gas companies and consumers, the contract mitigates potential disputes and ensures compliance with regulatory standards. The ring-fenced arrangement and restriction on existing localities prevent tariff conflicts and ensure economic sustainability for RLNG supplies.

In conclusion, the RLNG supply contracts provide a comprehensive legal structure that supports the government’s policy to expand RLNG usage in new housing developments. This framework not only facilitates the growth of RLNG infrastructure but also ensures regulatory compliance and consumer protection.