The Sui Southern Gas Company Limited (SSGC), backed by Petroleum Ministry, and Jamshoro Joint Venture Limited (JJVL), have reportedly locked horns because of professional competition and personal differences, sources told Business Recorder.
The SSGC says it has recovered Rs 963 million from private sector LPG producer JJVL as part of a "special recovery initiative." SSGC issued a notice dated Saturday, May 28 on JJVL to remit Rs 2.54 billion "within seven days." JJVL disputed these claims and took the matter to Sindh High Court. JJVL completed payment of Rs 963 million to SSGC on June 20, in accordance with representations made before the court and "as a gesture of good will without prejudice." The court also ordered SSGC to convene a meeting to resolve all outstanding issues with JJVL.
The recovery initiative for JJVL does seem to be special, given that, according to SSGC's audited accounts up to March 31, 2011, the gas utility trade debts of Rs 50.77 billion and receivables of Rs 26.94 billion including from Sui Northern Gas Pipelines (SNGPL) and Karachi Electric Supply Company Limited (KESC). It remains to be seen whether the recovery initiative will extend to these companies as well.
What complicates matters is that JJVL is believed to be among the parties bidding for Progas Pakistan Limited, the bankrupt LPG marketing company based in Karachi that also took part in tenders for rental power projects (RPPs) competing with JJVL's sister concern Pakistan Power Resources. SSGC is strenuously pursuing acquisition of the same company. The sale of Progas has been ordered by the Sindh High Court at the urging of financial institutions. Bidding did not take place last month, as scheduled, after SSGC moved court to seek more time for its own bid preparation and board approvals.
There is also the LNG race. JJVL's associated company Pakistan GasPort Limited is setting up an LNG import terminal at Karachi. In this, it is competing not only with Engro Vopak but also a Turkish company called Global Energy Holding. It was recently reported that the government is "going out of its way to help this little known" company in procuring permissions and facilities. The recent damaging news report also states that the company has "hired politicians and bureaucrats to push its case."
Besides competing corporate interests, there are reports of friction between the Ministry of Petroleum and JJVL Chairman Iqbal Z Ahmed. When reached for comment, a spokesman for JJVL in Lahore said the company would not comment on a subjudice matter. "We are cognisant of our responsibilities, and shall continue to fulfil them," he said, adding that JJVL has paid a total of Rs. 23.99 billion to SSGC and Rs. 7.86 billion in taxes since commencing operations in March 2005.
"As one of the key players in Pakistan's oil and gas sector, we have and will interact professionally and cooperate with relevant government officials, including the Petroleum Ministry," he added.
The spokesman also said that JJVL has decided not to participate in the Progas auction. "We are processing a number of opportunities in the energy sector here and abroad, and have recently determined that the Progas opportunity does not sync with our business optimisation goals."
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