The report proposed the break-up of one of the largest gas pipeline networks in the world into one transmission and many distribution companies to enhance efficiency. PHOTO: FILE
The Ministry of Petroleum and Natural Resources is finding it hard to generate funds from global donors in hiring a consultant for a study on splitting gas utilities that could reduce transmission and distribution losses.
According to sources, the petroleum ministry pressed the Economic Affairs Division (EAD) to arrange financial assistance from donors and lenders like the US Agency for International Development (USAID) and the Asian Development Bank (ADB) for hiring the consultant.
In response, the EAD reminded the ministry that the Economic Coordination Committee (ECC) of the cabinet – the apex economic decision-making body – had only approved the hiring of the consultant and had not given clearance for seeking funds from international development partners and donors.
The EAD also pointed out that, according to the guidelines, Project Cycle-1 (PC-1) or at least the concept paper is required for approval by the ECC before foreign donors could be approached for assistance. It suggested that the ministry needed to fulfill the formalities before knocking the doors of the development partners. The PC-1 also needs approval of the Planning Commission.
The petroleum ministry had earlier conveyed to the ECC that since the gas sector played an important role in ensuring Pakistan’s financial and macroeconomic sustainability, it needed a comprehensive reforms programme including commercialisation of operations and restructuring of companies to make them more efficient and consumer-friendly.
Then adviser to the prime minister on petroleum and natural resources Dr Asim Hussain had taken an initiative to ‘unbundle’ the two gas distribution and transmission companies – Sui Southern Gas Company and Sui Northern Gas Pipelines – in an attempt to reduce gas theft and leakage — called Unaccounted for Gas (UFG), the ministry said.
Hussain also constituted a committee in October 2012, headed by the member energy of the Planning Commission, which submitted its report on December 27, 2012.
The report proposed the break-up of one of the largest gas pipeline networks in the world into one transmission and many distribution companies to enhance efficiency. All the business units will be further divided into independent profit and cost centres for ensuring cost-effective operations.
The establishment of small gas companies as well as a gas market has assumed immense and immediate importance as liquefied natural gas (LNG) and natural gas imports through pipelines cannot be managed in the current regulatory environment.
The committee has prepared terms of reference for a comprehensive study on splitting the natural gas transmission and distribution companies into small units and proposed implementation.
The study suggests preparation of a new model of gas infrastructure based on international practices and setting up of efficient units. It also calls for devising a new pricing mechanism for sale of natural gas to different sectors.
Published in The Express Tribune, November 19th, 2013.
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During PPP tenure, Dr Asim engaged World Bank to conduct a study on unaccounted-for-gas in Pakistan. After two years of details study and consultations with key energy sector players, the World Bank has concluded that Pakistan can reduce its gas losses from 10 per cent to one-to-two per cent to meet international standards by taking some appropriate measure but so far, senator Syeda Sughra Imam, who is de-facto minister Petroleum & Natural Resources didn’t pay head toward this grave issue.