ISLAMABAD: The government has promised Sui Northern Gas Pipelines Limited (SNGPL) that its proposed gas sector reforms won’t impact the company, shareholders or its employees, the entity disclosed.
A letter addressed to SNGPL’s managing director by Ministry of Energy (Petroleum Division) has provided this reassurance, reported Express Tribune.
This issue came up for deliberation during Thursday’s first consultative session held in Peshawar by Oil and Gas Regulatory Authority (OGRA). Other sessions are scheduled to follow in Islamabad, Lahore, Karachi and Quetta over the next two weeks.
Currently a fixed return model is being followed, but OGRA recommended a varying rate of return formula for public gas entities which includes SNGPL and Sui Southern Gas Company (SSGC).
OGRA’s chairperson Uzma Adil Khan has reassured that the watchdog hasn’t taken any final decision in this regard, which would only be concluded after holding consultations with SNGPL/SSGC and the federal government.
The new proposed rate of return should not be less than return permitted to gas distribution and transmission entities under their agreements. Whether rate of return is variable or fixed, this won’t impact the employees and shareholders of either SSGC or SNGPL.
According to company officials and the government, the gas entities have faced acute financial crisis due to changes in bulk/retail consumers ratio. Originally, bulk consumers constituted 70pc of the share and 30pc was formed by retail consumers.
The trend has reversed as now bulk consumers stand at 30pc and retail consumers at 70pc respectively, which according to SSGC/SNGPL are causing higher distribution and transmission losses, which impact their profits.
These reforms envisage the splitting up of gas companies into independent distribution and transmission entities and changing tariff regime is part of these proposed reforms.
Integral to these proposed gas sector reforms is the hiring of a transaction adviser, who will oversee the division of the gas entities and implement recommended structure.
Advisor will be responsible for establishing the entities sustainability and make them commercially viable besides employees and shareholders enjoy the same perks as they are receiving currently.
