Energy supply: SNGPL pushes down UFG loss significantly

Gas utility going for a paradigm shift in processes, policies and financial discipline

ISLAMABAD: The performance of Sui Northern Gas Pipelines Limited (SNGPL) is getting better swiftly as losses caused by theft and leakages have gone down significantly, which will lead to an addition of billions of rupees to the company’s profit.

SNGPL’s unaccounted-for-gas (UFG) loss, caused by gas stealing and system leakages, had dropped from 11.13% in July 2015 to 9.14% in June 2016, resulting in improved earnings for the gas utility. Now, the loss has come down further.

Apart from this, the company is working on augmenting its pipeline network to enhance capacity and transmit 1.2 billion cubic feet of liquefied natural gas per day.

“The UFG loss has fallen further to 8.3% and its impact will be reflected in the company’s upcoming revenue requirement,” revealed a senior official of SNGPL while talking to The Express Tribune. “A 1% reduction in the UFG level means injection of Rs2 billion into its profit.”

According to the official, the Oil and Gas Regulatory Authority (Ogra) allows recovery of 4.5% UFG loss from gas consumers whereas the remaining burden is borne by the company. The decline in UFG level will provide the company an opportunity to stave off a major hit to its balance sheet.

SNGPL, one of the two gas utilities in the country that serves consumers in Punjab and Khyber-Pakhtunkhwa, is now entering a new era as it is undergoing a paradigm shift in processes, policies and financial discipline.

“With enhanced focus on our core operations, customer services and employee care, while adopting a bottom-up approach, we have been able to achieve a number of milestones in a very short span,” the official said, adding the prime indicator of the company’s performance was the lower UFG loss.

SNGPL’s financial health, which had remained feeble for the past few years, has now improved with positive figures emerging in the very first year of revamp.

“After declaring losses for three years, the company is in a position to declare profit. The quantum of earnings may only be assessed after Ogra’s determination of UFG level,” the official said, revealing a formal UFG benchmark study was being undertaken by the regulator on request of the gas utility.

Published in The Express Tribune, November 16^th, 2016.

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