SSGC to build 370km pipeline from Karachi to Sawan

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New plans have been outlined by state-owned gas utilities to install new pipelines which will allow for shipment of higher volumes of imported gas from Karachi to Lahore for mega powerhouses, industrial, domestic and commercial users.

The pipeline project is being initiated in advance of additional imported gas (1.2 billion cubic feet per day – bcfd) after the construction of two new import terminals at Port Qasim, Karachi, by the end of 2018.

Sui Southern Gas Company (SSGC) will be responsible for constructing the pipeline from Karachi to Sawan whereas Sui Northern Gas Pipelines (SNGPL) will build it from Sawan to Lahore.

A summary sent to the bourse on Thursday from SSGC said its board of directors had conceptually approved the capital investment of Rs64.99b for a 370km pipeline from Karachi to Sawan.

The project will be financed through commercial borrowing with the backing of the Federal government.

The arrangement of financing is being made through a long-term loan from the federal government or through commercial borrowing backed by sovereign guarantees of the federal government including the waiving of existing loan covenants from the quarters concerned,  read the notification signed by Company Secretary Shoaib Ahmed.

SSGC which supplies natural gas to Sindh and Balochistan is hopeful to complete its part of the pipeline by October 2018. The announcement propelled SSGC’s stock price to its 5pc upper limit for the day and it closed at Rs37.73 with a volume of 2.55 million shares.

The board of SSGC has given the go-ahead to the project subject to approval from the regulator and government authorities including the Oil and Gas Regulatory Authority (OGRA), Economic Coordination Committee (ECC) and Ministry of Petroleum and Natural Resources.

The government wants to arrange import of another 1.2 bcfd for upcoming LNG (liquefied natural gas) terminals, in light of reducing indigenous gas resources, and meeting the increasing demand from all sectors for which there is an immediate need for the development of 1.2bcfd pipeline capacity from Karachi to Lahore, the SSGC notification added.

Currently, Punjab is the recipient of around 400-600m cubic feet of imported gas per day (mmcfd) via SSGC and SNGPL pipelines. The primary beneficiaries of LPG supplies are textile mills, compressed natural gas (CNG) filling stations and fertiliser plants connected to the SNGPL network.

 

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