SSGCL's recovery of Rs 12 billion due to higher UFG: Ogra seeks to engage 3rd party technical consultant

Petroleum Division has asked the Economic Coordination Committee (ECC) of the Cabinet to direct Oil and Gas Regulatory Authority (Ogra) for allowing Sui Southern Gas Company Limited (SSGCL) to recover Rs 12 billion due to higher Unaccounted for Gas (UFG) following injection of imported RLNG in the system.

M/s SSGCL approached Ogra in the light of the ECC approved guidelines and presented its case duly supported by technical data but the request of SSGCL was turned down. The SSGC was of the view that Ogra officials acknowledged the issue presented by SSGC but in order to ascertain the magnitude of its impact, Ogra intends to engage a third party technical consultant, the cost of which shall be borne by SSGCL, sources said.

Before the commissioning of dedicated RLNG pipeline, M/s SSGCL was fully consuming all RLNG into its distribution network at Karachi and was diverting indigenous gas to M/s SNGPL. Due to difference of gross calorific value (GCV)/heating value and specific gravity of the RLNG and indigenous gas, the commingled utilization of gas within the M/s SSGCL system had resulted into higher unaccounted for gas (UFG) specifically in Karachi region and this inflicted financial burden on SSGC due to non-recovery of the impact, revealed a summary.

M/s SSGCL's financial statements for the financial year 2017-18 are yet to be finalized which are contingent upon the determination of final revenue requirement (ERR) for the same year by Ogra. Non-finalization of financial statements has led to the issuance of show cause notice by SECP to SSGCL board of directors.

The SSGCL has claimed an amount of Rs 12 billion up to financial year 2017-18 in the determination of ERR of 2017-18, Petroleum Division informed in a summary tabled before the Economic Coordination Committee (ECC).

On the other hand, the SSGCL has so far offered Rs 15 billion by the end of 2017-18 to its indigenous gas customers tariff as an additional revenue it earned by selling commingled higher GCV gas to its customers, Petroleum Division said, adding that but due to the ring-fenced nature of both indigenous gas pricing and RLNG pricing, the Ogra could not account for the additional revenue of SSGCL against the impact of UFG due to injection of RNLG.

The flow of RLNG from first LNG terminal of M/s EETPL commenced in end-March 2015 and, however, necessary infrastructure was non-existent at that time to transmit the RLNG from Port Qasim Karachi to Lahore where intended consumption centers are located.

Accordingly, keeping in view this operational constraint at that time, it was decided for the time being to utilize the exiting volume swapping capacity of the transmission and distribution network of both the Sui companies whereby imported RLNG is to be utilized within the Sindh province and equivalent energy units of indigenous gas are transferred to M/s SNGPL by SSGCL from various indigenous gas fields.