ISLAMABAD: In a major development to strengthen the struggling Sui Southern Gas Company Limited (SSGCL), the Finance Division has supported a proposal of injecting Rs12 billion into the company, the amount which the company has claimed on account of higher unaccounted for gas (UFG) it faced following transporting the imported RLNG to the consumers.
In its comments on a summary moved by Petroleum Division to the Economic Coordination Committee (ECC) of the cabinet, the Finance Division said that it is of the view that partial implementation of the decision of the ECC taken on May 11, 2018 till date, and differing positions taken by the SSGC and Ogra have negative financial implications for the company being unable to finalise its financial statements for fiscal year 2017-18 as well as to recover the costs associated with the handling of RLNG in its system, official documents exclusively available with The News say.
“It is therefore imperative to address the issue holistically to ensure that the SSGCL remain financially viable and sustainable,” the Finance Division said by commenting on proposal moved by the Petroleum Division to the ECC. The Petroleum Division has approached the ECC to direct Oil and Gas Regulatory Authority (Ogra) to allow SSGCL recover the said amount due to higher UFG following injection of imported RLNG in the system.
“M/s SSGC may be allowed UFG based on RLNG handling basis (volumetric basis) in the sale of price of RLNG in the form of distribution loss due to swapping arrangements and consumption of RLNG in its franchise area in partial modification of para-3 (viii) of the summary approved by ECC vide ECC-72/12/2016 dated 14-06-2016.” The Finance Division said, adding, “Distribution loss to be determined and charged at actual including the losses due to swapping arrangements and consumption of RLNG in SSGC franchise area (determined on volume handled basis i.e. metered system gas in and metered system gas out).”
Before the commissioning of dedicated RLNG pipeline, M/s SSGCL was fully consuming all RLNG into its distribution network at Karachi and was diverting indigenous to M/S SNGPL in life therefore. Due to difference of gross calorific value (GCV)/heating value and specific gravity of the RLNG and indigenous gas, the comingled utilisation of gas within the M/S SSGCL system had resulted into higher UFG specifically in Karachi region and this inflicted financial burden on the SSGC due to non-recovery of the impact, revealed the summary.
It is important to highlight that M/S SSGCL’s financial statements for the year 2017-18 are yet to be finalised which are contingent upon the determination of final revenue requirement (FRR) for the same year by Ogra. Non-finalisation of financial statements has led to the issuance of show cause notice by the SECP to SSGCL board of directors.
The SSGCL has claimed an amount of Rs12 billion up to financial year 2017-18 in the determination of estimated revenue requirement (ERR) of 2017-18, petroleum division informed in a summary tabled before ECC.
On the other hand, the SSGCL has so far offered Rs15 billion by the end of 2017-18 to its indigenous gas customers tariff as an additional revenue it earned by selling comingled higher GCV gas to its customers, Petroleum Division said, adding that but due to the ring-fenced nature of both indigenous gas pricing and RLNG pricing, Ogra could not account for the additional revenue of SSGCL against the impact of UFG due to injection of RNLG.
The flow of RLNG from first LNG terminal of M/s EETPL commenced in end March 2015 and however necessary infrastructure was non-existent at that time to transmit the RLNG from Port Qasim Karachi to Lahore where intended consumption centres are located. Accordingly, keeping in view this operational constraint at that time, it was decided that for the time being utilise the exiting volume swapping capacity of the transmission and distribution network of both the Sui companies whereby imported RLNG is to be utilised within Sindh and equivalent energy units of indigenous gas are transferred to M/S SNGPL by SSGCL from various indigenous gas fields.
Currently, both LNG terminals are operational with the government contracted total terminal capacity of 1200 mmcfd.
from The News International - National https://ift.tt/2sbU6UE
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