SSGC to launch dedicated gas supplies

Sui Southern Gas Company Limited (SSGC) is set to inaugurate a new phase of gas supplies, connecting “dedicated pipelines” to industrial zones and residential areas in Karachi starting July 15, 2024. This initiative aims to supply high-pressure gas to industrial areas and low-pressure gas to residential zones.

During a media briefing on Wednesday, Imran Maniar, Managing Director of SSGC, revealed that the projects, among others, were completed with an investment of Rs15 billion in the fiscal year 2023-24. However, he cautioned that these infrastructure improvements might not completely resolve supply outages due to the “constant depletion in gas reserves and the absence of new major discoveries for nearly two decades.”

Maniar stated that despite the regulatory authority’s refusal to increase gas prices across the board to boost the company’s sales revenue, it did raise the gas tariff for captive power plants by Rs250/mmbtu (million British thermal units) to Rs3,000/mmbtu. This new tariff for industrial consumers is expected to generate an additional Rs13-15 billion for the company, partially offsetting revenue shortfalls.

The company has installed six major dedicated pipelines in Karachi to enhance gas supplies to industrial zones, including SITE (Shershah), Hub, Korangi, and Landhi. Maniar noted significant industrial developments in Nooriabad and Hub, with the gas utility firm receiving applications for new industrial connections for the first time in several years.

“We have received applications for new industrial gas connections totalling 40-50 mmcfd (million cubic feet per day) over the past six months, compared to almost no applications in the previous years,” Maniar said.

The synchronisation of the dedicated lines, scheduled for July 15, is expected to provide consistent high-pressure gas to industries, boosting industrialisation, economic activities, and job creation in the country. Separating industrial areas from residential zones in the gas supply network is crucial due to the different pressure requirements for each sector. Residential gas use, particularly for stoves in the morning, previously disrupted industrial supplies, causing significant losses to producers in sectors such as textiles, fertilisers, and edible oils.

Maniar reported that gas supplies from local fields have decreased to 710-715 mmcfd, down from around 1,100 mmcfd in FY19 due to reserve depletion. The shortfall is partially met with imported liquefied natural gas (LNG), with the company offering various blends to different consumer categories, including industrial, commercial, and domestic users.

Efforts to reduce line losses and gas theft, known as unaccounted-for gas (UFG), have cut these losses in half to around 7% in Karachi from 14-15% a few years ago. This reduction has saved approximately 50 billion cubic feet of gas, equating to Rs50 billion in line losses and theft savings. The UFG level is currently at a 22-year low, reversing a trend of rising losses since 2002.

“The continuous increase in gas prices had encouraged theft,” Maniar explained.

The gas utility firm plans to lay more new lines and rehabilitate old ones to ensure gas reaches tail-end consumers in residential areas, including Garden, Lyari, Mithadar, Kharadar, Keamari, and Jamshed Town, in the current fiscal year 2024-25 and beyond. In FY24, SSGC rehabilitated 1,500 kilometres of gas pipelines and aims to increase this to 2,500 kilometres in FY25, managing around three million customers over a 50,000-kilometer network in Sindh and Balochistan.

Maniar anticipated increased gas exploration activities following the government’s approval of a tight gas policy, offering a 40% higher price for gas to exploration firms due to the higher capital required for drilling shale gas. He also mentioned that Prime Minister Shehbaz Sharif has given a one-month deadline to finalise a coal gasification policy, which could potentially produce one billion cubic feet of gas per day from Thar coal.