Gas utility strives to cut theft and wastage

Pipeline network spread over 5,000 km to be rehabilitated.

KARACHI:

Sui Southern Gas Company (SSGC) has said the company is working on a $200 million efficiency programme with the support of the World Bank, which will bring down gas theft and leakage to seven per cent of production from the current 8.4 per cent.

Under the five-year programme, aging gas pipelines spread over 5,000 kilometres will be rehabilitated, Azim Iqbal Siddiqui, Managing Director of SSGC, said in an annual general meeting held in Karachi on Friday.

He said the distribution network in the biggest gas consuming centre, Karachi, had been bifurcated into three regions on the basis of natural geographical boundaries and the strategy had started showing results in quantifying the gas theft and wastage level – called ‘Unaccounted for Gas’ (UFG) in technical terms.

Under the benchmark set by the Oil and Gas Regulatory Authority (Ogra) based on international standards, the state-run gas utilities should bring down their UFG levels to five per cent. “SSGC is expected to reduce gas theft and leakage from 8.43 per cent to seven per cent over five years,” said Inayatullah Ismail, SSGC’s Chief Manager for Media Relations.

He said SSGC had to give a penalty of Rs1 billion to Ogra on every one percentage point increase over the UFG benchmark. Later, Ogra raised the benchmark level to seven per cent.

In an effort to plug wastage, Ismail said, SSGC had started pipeline rehabilitation work in Quetta, Hyderabad and other old cities in Sindh and Balochistan, the region covered by SSGC. “Bends in pipelines are being removed, which are the main cause of wastage in old areas,” he said.

Discussing gas theft, he said residential consumers were the main segment which stole the resource as no law existed in the country which could empower the company to slap penalties on such consumers.

However, a parliamentary panel has sent a bill to parliament which may allow the gas company to penalise illegal consumers.

Dividend and bonus shares

The annual general meeting approved 25 per cent cash dividend and five per cent bonus shares for the shareholders. In financial year 2010-11, the company posted a net profit of Rs4,724 billion compared to Rs4,399 billion in 2009-10.

The SSGC top brass said the company was working on fast-track import of liquefied natural gas (LNG) through a third party regime which would bring 1.4 billion cubic feet of gas by 2012.

They said SSGC had acquired Progas liquefied petroleum gas (LPG) plant, which would not only provide additional gas to far flung areas, where gas distribution through pipelines was not cost-effective, but would also allow diverting natural gas to the industry.

Discussing the challenges, the managing director said owing to mounting receivables from the Karachi Electric Supply Company (KESC), which stood at Rs32 billion, SSGC was negotiating a gas sales agreement, which would help in recovery of new bills.

Published in The Express Tribune, October 30^th, 2011.