Business dealing: JJVL to process LPG from three fields in Sindh

SSGC to have exclusive rights over LPG unlike previous arrangement with the venture.


Saad Hasan July 24, 2014

KARACHI:


Jamshoro Joint Venture Limited (JJVL) will extract LPG from gas coming out of three petroleum fields in Sindh, Sui Southern Gas Company (SSGC) Managing Director Shoaib Warsi told The Express Tribune.


SSGC had issued a tender inviting bids from parties interested in separating liquefied petroleum gas (LPG) from natural gas being pumped out of Kunnar-Pasakhi, Sinjhoro and Naimat Basal fields against a processing fee.

The last date for submitting the bids is August 4 but the utility, which meets natural gas demand in Sindh and Balochistan, did not receive a positive response from anyone except JJVL.

“We have signed a memorandum of understanding with JJVL (sponsors),” he said. “None of the other contenders could meet our specifications. Obviously, JJVL has an advantage since it already has a plant on ground.”

The three fields currently produce 224 million cubic feet per day (mmcfd) of gas. SSGC will only pay the processing fee and will have exclusive rights over LPG unlike the previous arrangement with JJVL, he said.

JJVL, a project of Lahore-based Associated Group, which is owned by Iqbal Z Ahmed, was also processing gas from the Badin field to extract LPG. But the project has been struck down by the Supreme Court and the two firms await a detailed judgement to decide its fate.

“Under the latest tender deal, 100% of LPG is ours. We will only pay the processing fee,” Warsi said, hinting at the increase in the profit of SSGC.

The amount for the processing fee remains unclear along with the effect it would have on the state-run utility’s bottom line.

But he pointed out that gas supply from the Badin field has dropped to only 70 to 80 mmcfd against 220 mmcfd a couple of years ago. “We are fortunate in the sense that Sindh has all these other fields having a good composition of LPG and NGL (natural gas liquids).”

JJVL in limbo

The Associated Group was dealt a blow in December 2013 when the Supreme Court annulled its JJVL project citing irregularities in the way LPG extraction rights were awarded in the early 2000s.

The company subsequently filed a review petition but lost that as well earlier this year.

The plant built with an investment of $105 million extracted LPG components from the system of SSGC. It was the single largest producer of the fuel in the country.

As per the court’s decision, SSGC has to start talks with JJVL to determine the acquisition price of the extraction plant so it can take it over.

JJVL ended up in court after PML-N leader Khawaja Muhammad Asif, now the powerful Defence Minister, approached it.

A court-appointed committee comprising an ex-government official M H Asif and renowned accountant Shabbar Zaidi has already valued the plant at Rs3.2 billion. JJVL says it is worth much more.


Published in The Express Tribune, July 24th,  2014.

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