AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, July 10, 2013 (PPI-OT): Contrary to the news that appeared in sections of the press on July 9, 2013, on a query raised with SSGC, it is clarified that the Oil and Gas Regulatory Authority (OGRA) has not approved the Company’s UFG losses at 7% and its decision of 4.5% UFG benchmark remains unchanged. Since there is no change in OGRA’s decision, hence there remains no question of any additional cost of Rs. 18 billion being imposed on gas consumers across the country.
SSGC emphatically denies the above representation carried out in sections of the press and considers them as being unfounded.
It is also important to note that the gas tariff is uniform for all consumers across the country and there is no difference between SSGC and SNGPL on this count. Hence the message communicated in this regard in the said news item is incorrect and misleading.
Even if OGRA allows SSGC all its rightful expenses, the increase in tariff will only be 5%. Moreover, 70% of SSGC consumers who are already highly subsidized may not even be affected.
Notwithstanding the afore-stated, the matter of the 4.5% UFG benchmark set by OGRA is subjudiced and SSGC has consequently been granted a stay by the honourable Sindh High Court against OGRA’s decision after hearing detailed arguments raised by the Company in a petition filed before the Sindh High Court in this regard.
SSGC’s UFG currently stands at 105 mmcfd and the figure of 400 mmcfd as suggested in the media is therefore 4 times higher than the Company’s UFG. According to SSGC’s understanding, the 105 mmcfd may result in generation of not more than 400 mw of electricity. This is, however, assuming 0% UFG which is not possible in real terms. Even in developed economies, 6% UFG is generally acceptable, and it does not include the added theft and law and order which is prevalent in Pakistan.
Despite the stringent benchmarks, SSGC has taken extraordinary efforts in curbing UFG across the board despite adverse law and order conditions prevailing in its operational areas. Measures aimed at curbing theft, minimizing leakages and an elaborate meter change activity have produced encouraging results in reducing UFG. SSGC expects a reduction of 2% in UFG over last year. In monetary terms, that means an increase of Rs. 2.9 billion in the Company’s bottomline.
It is quite clear that unsubstantiated facts have been placed before the media. The truth is that the honourable Supreme Court is currently reviewing the grant of licenses in the CNG sectors by OGRA whereas Lahore and Sindh High Courts are reviewing the tariff determinations made by OGRA for SNGPL and SSGC, respectively.
As per media reports, the Supreme Court has already taken cognizance of the inability of the Authority to control gas theft. Although thousands of theft cases have been placed before OGRA by the Company, the Authority has not acted on them and have instead issued stay orders against the utility companies for recovering amounts of stolen gas themselves.
Due to the inability of OGRA to act against gas theft, there exists no real deterrent for gas thieves. As a consequence, the instances of gas theft have consistently increased. It also has to be highlighted that OGRA by law is required to consider the cost of alternative fuel while setting the prices.
However that has not happened and large industrial units are currently buying gas at a fraction of the cost of alternative fuel prices. Clearly there seems to be a larger conspiracy in play meant to bankrupt two companies – SSGC and SNGPL who are amongst the few large scale government-owned companies to have never asked the government for bailout funds. The figure of Rs. 18 billion as quoted in the sections of the press has been deliberately flaunted to distract the public from these true facts.
As far as stay orders granted by the Sindh High Court is concerned, the Authority is expected to show more responsibility and not give the impression that the petition pending in the Sindh High Court has been instituted by private shareholders. In reality, it is SSGC which has challenged the determination made on the first of June 2013 on the Company’s revenue requirements under the relevant provisions of law.
The impugned decision was against the law, in disregard of the judgments of the superior courts and passed without the requisite quorum. Moreover, UFG benchmark was set without carrying out mandatory consultation as required by law and as held by the Lahore High Court in SNGPL’s case as well as the meaning and purpose of consultation as explained by the Supreme Court.
It is also not correct to state that the petition has been filed for the benefit of private shareholders. The petition has been filed on behalf of SSGC by the duly appointed legal counsel of SSGC and has been filed to protect the interest of the Company in which the Government of Pakistan directly and indirectly holds 86% shares, and the interest of the public at large.
Unfounded allegations only serve to distract the superior courts and the public at large from the real issues being reviewed by the superior courts. SSGC expects media to show more level headedness and responsibility in projecting the gas utilities so that a true picture is communicated to the people.
For more information, contact:
Inayatullah Ismail
Deputy Chief Manager
Sui Southern Gas Company (SSGC)
Corporate Communication Department (Media Relations)
Tel: +9221 9902 1773
Cell: +92322 222 5159
Fax: +9221 9923 1662
Email: inayatullah@ssgc.com.pk