Sindh, Balochistan industries to bear the brunt for Sui Southern Gas losses

In a significant setback for the industrial sectors of Sindh and Balochistan ae set to bear the brunt for the inefficiency of the Sui Southern Gas Company (SSGC) as the gas company look to cover the losses due to gas theft and leakage from the industrial sector, reported 24NewsHD TV channel Tuesday.

The consequences of these losses have now reverberated through the commercial and captive power plants, imposing penalties on industries in the region.

This development has raised concerns among industry stakeholders and has garnered attention from the Oil and Gas Regulatory Authority (Ogra).

Sources have indicated that SSGC has suffered billions of rupees in losses due to gas theft and leakage within its system. These alarming figures have left Ogra astonished and prompted a closer examination of the situation.

As a result, industries in Sindh and Balochistan, including Karachi, will now have to procure expensive Regasified Liquefied Natural Gas (RLNG) compared to other provinces.

Despite the declining prices of RLNG in the global market, Ogra has taken the decision to increase RLNG rates for SSGC, rather than offering relief through lower prices. This move has been attributed to the losses incurred by SSGC due to the Unaccounted-for Gas (UFG) loss in its distribution network. An Ogra spokesperson confirmed that the increase in RLNG prices is a direct consequence of this UFG loss.

In contrast, the pricing scenario for Sui Northern Gas Pipelines Limited (SNGPL) presents a different picture. The rates for SNGPL have actually decreased in July compared to June, with the price falling to $12.64 per million British thermal units (mmbtu) at Ogra, as opposed to $12.71 in the previous month. However, for SSGC, the price of RLNG has increased to $13.13 per mmbtu from $12.94 in June, exacerbating the financial burden on industries in Sindh and Balochistan.

The financial outlook for SSGC is a matter of concern, as the company, which reported a profit of Rs. 1.09 billion in 2020-21, now faces the possibility of incurring losses of up to Rs. 8 to 10 billion in just one year. The company's financial report for the first nine months of 2021-22 indicates a loss of over Rs. 5 billion. This challenging situation is compounded by a 2% increase in UFG, reaching the highest rate of 19% over the last nine months. As a result, the projected deficit for 2021-22 is expected to reach Rs. 8 to 10 billion due to financial losses and issues of gas theft and wastage.

The implications of these developments are far-reaching, as the penalties imposed on industries in Sindh and Balochistan could have adverse effects on their operations, competitiveness, and overall economic growth. Stakeholders are now closely monitoring the situation, hoping for prompt resolutions to mitigate the impact on the industrial sectors and ensure sustainable energy supplies in the region.