SSGC seeks government guarantees for bank loans
Company needs Rs14b for setting up 30 plants in Sindh, Balochistan
PHOTO: REUTERS
ISLAMABAD:
Sui Southern Gas Company (SSGC) has sought guarantees of the federal government for bank loans of billions of rupees it needs for setting up 30 liquefied petroleum gas (LPG) air-mix plants in remote areas of Sindh and Balochistan.
The Economic Coordination Committee (ECC) of the cabinet has already allowed, in a meeting held on October 31, 2016, the installation of 60 air-mix plants by two public gas utilities in far-off regions of the country.
Sindh: SSGC to complete Shikarpur-Jacobabad pipeline next month
Of the 60 plants, SSGC has been tasked with setting up half of them in Sindh and Balochistan - the two provinces where the company has a gas transmission network.
Two plants will be installed in the remote areas of Umerkot and Mithi in Sindh whereas the remaining will be developed in Balochistan.
Following the ECC’s decision, the government had directed SSGC to install all the plants immediately.
Talking to The Express Tribune, an SSGC official revealed that the company had completed feasibility study of the air-mix plants and now preparation was under way for inviting Expressions of Interest for the front-end engineering design (FEED) study.
The official said the Ministry of Petroleum and Natural Resources had pressed for providing funds to SSGC as the company was also initiating the second liquefied natural gas (LNG) pipeline project with borrowing from commercial banks.
Accordingly, SSGC requested financing on soft terms with sovereign guarantees. The petroleum ministry later asked the Ministry of Finance to arrange soft-term commercial loans of Rs10 billion from the financial market along with sovereign guarantees and at a competitive interest rate for a period of 10 years.
Cost estimates of the planned 30 LPG air-mix plants and their distribution networks have been prepared. Approximately, Rs14 billion will be required for installing the plants.
According to the existing balance sheet capacity, SSGC has managed to meet Rs18 billion of the total financing requirement for the LNG pipeline and the balance Rs40 billon has been arranged with the help of sovereign guarantees of the federal government.
Government hikes Sui field’s gas price
The project is near completion and the government now intends to start third LNG pipeline project as well as help install 30 LPG air-mix plants at a total cost of Rs80 billion.
Pakistan is currently facing severe natural gas shortage both for electricity generation and general consumption. It produces 4 billion cubic feet of gas per day (bcfd) whereas consumer requirement is 6 bcfd, leaving a shortfall of 2 bcfd.
The demand is rising constantly and the shortfall has hit economic growth of the country. Keeping in view the shortage, the government is pushing ahead with plans to set up LPG air-mix plants in areas where piped gas supply is not economically feasible.
The government is also importing liquefied natural gas (LNG) for the first time in the country’s history, which flows to compressed natural gas (CNG) filling stations, fertiliser plants, power producers and industrial consumers.
At present, 600 million cubic feet of LNG per day is being imported, which contributes 20-25% to bridging the shortfall.
Published in The Express Tribune, August 8th, 2017.
Sui Southern Gas Company (SSGC) has sought guarantees of the federal government for bank loans of billions of rupees it needs for setting up 30 liquefied petroleum gas (LPG) air-mix plants in remote areas of Sindh and Balochistan.
The Economic Coordination Committee (ECC) of the cabinet has already allowed, in a meeting held on October 31, 2016, the installation of 60 air-mix plants by two public gas utilities in far-off regions of the country.
Sindh: SSGC to complete Shikarpur-Jacobabad pipeline next month
Of the 60 plants, SSGC has been tasked with setting up half of them in Sindh and Balochistan - the two provinces where the company has a gas transmission network.
Two plants will be installed in the remote areas of Umerkot and Mithi in Sindh whereas the remaining will be developed in Balochistan.
Following the ECC’s decision, the government had directed SSGC to install all the plants immediately.
Talking to The Express Tribune, an SSGC official revealed that the company had completed feasibility study of the air-mix plants and now preparation was under way for inviting Expressions of Interest for the front-end engineering design (FEED) study.
The official said the Ministry of Petroleum and Natural Resources had pressed for providing funds to SSGC as the company was also initiating the second liquefied natural gas (LNG) pipeline project with borrowing from commercial banks.
Accordingly, SSGC requested financing on soft terms with sovereign guarantees. The petroleum ministry later asked the Ministry of Finance to arrange soft-term commercial loans of Rs10 billion from the financial market along with sovereign guarantees and at a competitive interest rate for a period of 10 years.
Cost estimates of the planned 30 LPG air-mix plants and their distribution networks have been prepared. Approximately, Rs14 billion will be required for installing the plants.
According to the existing balance sheet capacity, SSGC has managed to meet Rs18 billion of the total financing requirement for the LNG pipeline and the balance Rs40 billon has been arranged with the help of sovereign guarantees of the federal government.
Government hikes Sui field’s gas price
The project is near completion and the government now intends to start third LNG pipeline project as well as help install 30 LPG air-mix plants at a total cost of Rs80 billion.
Pakistan is currently facing severe natural gas shortage both for electricity generation and general consumption. It produces 4 billion cubic feet of gas per day (bcfd) whereas consumer requirement is 6 bcfd, leaving a shortfall of 2 bcfd.
The demand is rising constantly and the shortfall has hit economic growth of the country. Keeping in view the shortage, the government is pushing ahead with plans to set up LPG air-mix plants in areas where piped gas supply is not economically feasible.
The government is also importing liquefied natural gas (LNG) for the first time in the country’s history, which flows to compressed natural gas (CNG) filling stations, fertiliser plants, power producers and industrial consumers.
At present, 600 million cubic feet of LNG per day is being imported, which contributes 20-25% to bridging the shortfall.
Published in The Express Tribune, August 8th, 2017.