WB offers $115m for gas network improvement

The World Bank has offered $115 million to the Sui Southern Gas Company for improving infrastructure and increasing utilisation efficiency.

The offer came after the Ministry of Petroleum and Natural Resources sought the World Bank Energy Mission’s assistance in reducing unaccounted-for-gas (UFG) losses by optimising supply pressure, rehabilitating pipelines and curbing theft, according to a report in the latest edition of Flame, the monthly magazine of the Sui Southern Gas Company (SSGC).

Of the $115 million, the SSGC will spend $105 million on improvement of gas pipelines and associated infrastructure while $10 million will go to appliance efficiency pilot project.

The SSGC said that it has drawn up a five-year programme focused on the replacement of old pipelines and improvement of others, the introduction of automatic pressure management and the improvement of measurement.

According to the company, the World Bank support will speed up the UFG reduction programme, under which around 3,350 kilometres of pipelines will be replaced.

The SSGC said it has prepared short, medium and long-term strategies for tackling UFG losses. Under the short-term programme, it will reduce supply pressure during off-peak hours, operate the entire system at optimal pressure, check and replace minimum or nil bill meters and conduct pressure survey of commercial and industrial consumers.

Under the medium-term plan, the company will replace aged and deteriorated pipelines, check leakage and introduce smart meters.

In the long run, the company will rehabilitate main supply lines and develop a ring of main supply lines around Karachi which will serve as an alternative.

According to the report, SSGC Managing Director Faizullah Abbasi has constituted a task force which will conduct a highly specialised survey of 17,000 commercial customers to gauge the type of meters installed in their facilities. This will help combat the problem of UFG losses which has affected the financial health of the gas company, he said.

Abbasi said the need for the survey stems from the observation that commercial customers are showing a rather weak sales growth of 2.5 per cent compared to 9.5 per cent for the rest of the customers.

Natural gas accounts for 48 per cent of Pakistan’s energy mix due to availability of domestic gas resources. However, growth of population and economic activities has led to an increase in gas demand beyond the production capability of existing reserves.

Besides, there has been no significant discovery of gas reserves over the last five years while import options are yet to materialise.

According to the SSGC’s profit and loss accounts, the company posted a loss of Rs306.49 million in the nine months to March 2010 compared to a profit of Rs391.71 million in the same period of the previous year.

Published in The Express Tribune, June 19^th, 2010.