SSGC insists on its right to charge for stolen gas

Published: January 14, 2013
Ogra is apparently reluctant to pay heed to SSGC’s concern over the issue of minimum volume. PHOTO: FILE

Ogra is apparently reluctant to pay heed to SSGC’s concern over the issue of minimum volume. PHOTO: FILE


Sui Southern Gas Company (SSGC) Managing Director Zuhair Siddiqui has said that the Oil and Gas Regulatory Authority (Ogra) should allow SSGC to charge for gas on account of theft by non-registered consumers.

In an interview with The Express Tribune on Thursday, Siddiqui said Ogra is not allowing SSGC volumes on account of pilferage by non-consumers despite a directive of the federal cabinet issued on October 11 last year, which was followed by the Ministry of Petroleum and Natural Resources’ advice to allow the same.

“The law specifically states that it is the job of Ogra, not gas distribution companies, to recover the value of gas stolen,” he said, adding that SSGC has been regularly referring cases of gas theft by non-consumers to Ogra, but the authority has not been able to recover a single rupee so far.

According to the Natural Gas Licensing Rule, any person who has stolen gas is liable to pay Ogra the value of the gas stolen, which the authority is supposed to pass on to the licensee from whom the gas was stolen in the first place.

Similarly, the SSGC MD also contends that most meters recording less than 40 cubic centimetres (cm) of gas a month – the minimum billed consumers – are inaccurate and do not show the actual volume of gas passing through them. “This situation has arisen because of the astronomical pace of system expansion leading to low pressures, which has resulted in debris and impurities travelling through meters,” Siddiqui explained. Citing a study carried out by the University of Engineering and Technology, Lahore and the NED University of Engineering and Technology, he said it was practically impossible that a normal household using one burner for four hours a day would consume less than 40 cubic cm in a month.

Ogra is apparently reluctant to pay heed to SSGC’s concern over the issue of minimum volume. Since the volume claimed by gas distribution companies is unmetered, Ogra seemingly believes it is not in line with the definition of unaccounted-for gas (UFG) prescribed in the Tariff Rules 2002, which allow for only metered volumes.

However, Siddiqui insists that the volume of gas shown as metered has to be correct while following the literal definition of UFG.

The Express Tribune tried to contact Ogra Chairman Saeed Ahmad Khan and Ogra Member Gas Mansoor Muzaffar Ali for their remarks, but none of them was available for comment until the filing of this report.

SSGC’s UFG was 8.7% in 2011-12, up from 7% in 2003-04. However, Siddiqui says that SSGC’s bulk-to-retail ratio – ie, the proportion of gas that is sold in bulk to customers, such as KESC and Steel Mills, compared to gas supplied to commercial and domestic consumers – was 54:46 in 2003-04. In 2011-12, the bulk-to-retail ratio had changed to 28:72, reflecting a fundamental shift in SSGC’s customer base over years.

“Bulk is direct, where little leakage occurs. But retail involves lots of lines and metres, so the level of leakage is obviously higher,” he said, adding that computed on the bulk-to-retail ratio of 2003-04, the UFG would be a much lower 5.6% in 2011-12.

Siddiqui says that SSGC supplies 100 mmcfd to the CNG sector. “Although we suspend CNG supplies for three days a week, pumps still manage to sell nearly as much gas in the remaining four days as they would in a week without any CNG closure. But still, it helps us control pressure for other sectors on CNG suspension days,” he said.

He said all car owners belonged to the top 5% income bracket, which should be enough for the government to ban CNG in private cars. “The days of cheap gas are over. CNG should be restricted to public transport only. We’re the 27th largest producer of gas globally, but we’re number one in terms of CNG consumption,” he noted.

Published in The Express Tribune, January 15th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

Facebook Conversations

More in Business