Regulatory issues persist: SSGC MD quits as govt continues struggle

Warsi takes over Siddiqui’s seat, change comes just days after exit of PPL MD.

KARACHI:

Managing Director of Sui Southern Gas Company (SSGC), Zuhair Siddiqui, has resigned as an embattled government continues its struggle to deal with regulatory and legal issues related to energy losses and allegations of corruption, officials said.

SSGC announced Siddiqui’s departure on Thursday without offering any explanation except for a mention stating that, “... former MD submitted his resignation on personal grounds after leading the organisation for two years”.

In his place, the Ministry of Petroleum has appointed Shoaib Warsi, a career SSGC employee with 37 years of experience, mostly with the transmission and distribution side of the company.

Petroleum Minister Shahid Khaqan Abbasi said that Warsi has been given the MD’s charge temporarily. “We have reconstituted the boards in the energy companies. In the coming days, the board will appoint managing directors.”

Change at the top of SSGC comes just days after unceremonious exit of the Managing Director of Pakistan Petroleum Limited.

Earlier, the Supreme Court of Pakistan had asked the government to appoint a commission to appoint key officials in state-run companies including energy firms.

But now the government is following the procedure prescribed by the Securities and Exchange Commission of Pakistan (SECP) – through the board of directors.

Waiting for winds to change

Siddiqui and his management, just like those in its sister-organisation Sui Northern Gas Pipelines Limited (SNGPL), have been helpless for more than a year due to regulatory and legal issues.

SSGC has not been able to announce financial results for four previous quarters and is set to miss the target for the last April-June 2014 quarter as well.

“No one knows what is happening. This is second straight year for which we haven’t announced the financial results,” said a company official.

Revenue and expenditure of SSGC and SNGPL is decided by the Oil and Gas Regulatory Authority (OGRA), which has remained dormant for over a year due to lack of key appointment of a member and indecisiveness on crucial subject of Unaccounted for Gas (UFG) losses.

The UFG, which is basically the extent of loss of gas allowed to SSGC and SNGPL in their vast pipeline system, has become a contagious issue. Since the Tauqir Sadiq case exploded, many of the senior officials including Siddiqui, have been dragged into the investigations.

A simple solution

Abbasi said that the issue facing gas companies is not simple but insists there is indeed a way out.

“There is a reality, which needs to be accepted. And that reality is that UFG losses stand at 10.5% while Ogra is not willing to allow anything over 4.5% due to the fear of court orders,” said the minister. “That’s around a Rs6-billion difference. Who is going to pay that?” he asked.

The UFG losses stem from theft and erosion of pipelines. Massive expansion of piped gas to small towns and villages across the country has added to the losses, officials say.

The only way out for the Economic Coordination Committee is to ask Ogra to revise up the UFG limit, says Abbasi. “We will be taking a summary to ECC after Eid.”

Published in The Express Tribune, July 18^th, 2014.

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