Govt begins splitting gas utilities to get loans
Transmission and distribution businesses are being separated.
PHOTO: REUTERS
ISLAMABAD:
The government has already started the process of splitting public sector gas utilities in order to secure funds from the Asian Development Bank (ADB) and World Bank.
According to a senior government official, the separation of operational and accounting functions for the transmission and distribution businesses in both gas utilities - Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) - has been made effective since January 1.
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This has been done as part of energy sector reforms - a condition put forth by the multilateral donors.
“In a bid to split the gas utilities into different units, certain measures relating to the management structure and fine tuning of financial reporting are currently under way,” said the official.
“Both gas companies were asked to complete the entire process for the operational and accounting ‘unbundling’ as soon as possible since this was one of the conditions laid down by the ADB and World Bank,” the official added.
However, the government will be careful in the process because it intends to allow everyone to reap fruits of the reforms process.
“The government will issue a policy statement on the process, which is an important step to address concerns over the gas sector reforms,” said the official. “We will ensure in the policy statement that interests of all parties are safeguarded and there is no adverse impact of the reforms.”
Additionally, the regulatory environment will be made friendly for the implementation of market reforms.
The government will also frame third-party access rules since many parties are interested in gas transmission through the existing network.
It is relevant to mention that the Oil and Gas Regulatory Authority had earlier proposed amendments to the third-party access rules after a thorough consultative process for consideration and subsequent notification by the Cabinet Division.
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However, World Bank experts advised that the access rules be drafted as broad principles and details be specified in the network code, which could be changed more often and more easily to react to the changing circumstances.
“A common ownership of the transmission network based on open access system is the desired option and therefore the unbundling of the two gas companies into transmission and distribution businesses is paramount while introducing the reforms,” said the official.
Published in The Express Tribune, March 30th, 2017.
The government has already started the process of splitting public sector gas utilities in order to secure funds from the Asian Development Bank (ADB) and World Bank.
According to a senior government official, the separation of operational and accounting functions for the transmission and distribution businesses in both gas utilities - Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) - has been made effective since January 1.
ADB to provide Rs100m loan to acquire land for new ring road
This has been done as part of energy sector reforms - a condition put forth by the multilateral donors.
“In a bid to split the gas utilities into different units, certain measures relating to the management structure and fine tuning of financial reporting are currently under way,” said the official.
“Both gas companies were asked to complete the entire process for the operational and accounting ‘unbundling’ as soon as possible since this was one of the conditions laid down by the ADB and World Bank,” the official added.
However, the government will be careful in the process because it intends to allow everyone to reap fruits of the reforms process.
“The government will issue a policy statement on the process, which is an important step to address concerns over the gas sector reforms,” said the official. “We will ensure in the policy statement that interests of all parties are safeguarded and there is no adverse impact of the reforms.”
Additionally, the regulatory environment will be made friendly for the implementation of market reforms.
The government will also frame third-party access rules since many parties are interested in gas transmission through the existing network.
It is relevant to mention that the Oil and Gas Regulatory Authority had earlier proposed amendments to the third-party access rules after a thorough consultative process for consideration and subsequent notification by the Cabinet Division.
ADB stresses ‘full recovery’ of consumer bills
However, World Bank experts advised that the access rules be drafted as broad principles and details be specified in the network code, which could be changed more often and more easily to react to the changing circumstances.
“A common ownership of the transmission network based on open access system is the desired option and therefore the unbundling of the two gas companies into transmission and distribution businesses is paramount while introducing the reforms,” said the official.
Published in The Express Tribune, March 30th, 2017.