May 10, 2002	Friday	Safar 26, 1423

ISLAMABAD, May 9: The federal government has decided in principle to un-bundle the two gas utilities, Sui Northern Gas Pipelines Limited and Sui Southern Gas Company, into marketing and transmission companies for their ultimate privatization.

Official sources told Dawn that Asian Development Bank has appointed Pricewaterhouse Coopers as financial adviser recently in Manila for the restructuring of gas sector in Pakistan particularly SSGC and SNGPL.

The restructuring of the two gas utilities is most probably to be on the corporatization pattern of Wapda in which water and power sectors were separated and power wing was unbundled into 12 corporate companies. No privatization in the power sector could take place under this plan that started in 1995-96.

First phase of gas sector restructuring was approved on April 12, 2002 by the Central Development Working Party (CDWP) at a cost of $1.5 million.

Phase two, i.e. implementing the restructuring proposal approved by the CDWP and implementing the marketing and sale of the integrated or unbundled entities, was, however, left to the ADB and the financial advisers, these sources said.

Under the restructuring plan, the two utilities would be divided into a number of companies. This would be finally decided after the financial advisor’s report whether distribution companies should be established on regional basis, or marketing and sales and revenue collection companies.

Nevertheless, it has been agreed that there would be a “common carrier” that would purchase gas from producers and sell it to the distribution companies.

A third party access (TPA) to the gas network has been introduced and an arrangement in this respect is currently being finalized between SSGC and SNGPL that provides for the former to carry gas belonging to the other.

In order to build the fundamentals of a competitive gas market, it has been agreed to formulate detailed rules governing access to the network and the shipping of gas. The Oil and Gas Regulatory Authority (OGRA) has been asked to formulate the rules.

Under the $350 million structural adjustment credit and around a billion dollars energy sector restructuring programme being funded by the World Bank and the Asian Development Bank, the whole of energy sector is to become a stock market of energy services.