UFG benchmark stays unchanged at 4.5%: SSGC

Company says no additional cost Rs18b imposed on consumers.

KARACHI:

Sui Southern Gas Company (SSGC) has said the Oil and Gas Regulatory Authority (Ogra) has not approved 7% unaccounted-for-gas (UFG) losses for the company and its decision of 4.5% UFG benchmark remains unchanged.

Gas tariff is uniform for all consumers across the country and there is no difference between SSGC and Sui Northern Gas Pipelines Limited (SNGPL) on this count. Since there is no change in Ogra’s decision, no question arises of any additional cost of Rs18 billion being imposed on gas consumers across the country, SSGC says in a press release on Wednesday.

Even if Ogra allows the company all its rightful expenses, the increase in tariff will only be 5%. Moreover, SSGC says, 70% of its consumers who are already highly subsidised may not be affected.

Despite all this, the matter of 4.5% UFG benchmark set by Ogra is subjudice and SSGC has consequently been granted a stay by the Sindh High Court against Ogra’s decision after hearing arguments in a petition filed before the court.

The UFG currently stands at 105 million cubic feet per day (mmcfd) and, according to SSGC’s understanding, this quantity may result in generation of no more than 400 megawatts of electricity.

In an interview with The Express Tribune some time ago, the SSGC managing director had said 0% UFG was not possible in real terms. Even in developed economies, 6% UFG was generally acceptable and it did not include the theft and law and order problems afflicting Pakistan, he said.

The company says measures aimed at curbing theft and minimising leakages and an elaborate meter replacement drive have produced encouraging results in reducing UFG losses, which may come down by 2% over last year. In monetary terms, this means an increase of Rs2.9 billion in the company’s bottom line.

SSGC also claims that Ogra has never acted upon the requests of the company and has never taken strict action on gas theft. As a result, there exists no real deterrent to gas thieves and gas theft has consistently increased over the years.

Published in The Express Tribune, July 11^th, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.