ISLAMABAD, June 17: The federal government has decided to unbundle two gas utilities — SNGPL and SSGC — into at least four distribution and transmission companies before taking them to the privatization counter.
Official sources told Dawn on Tuesday that economic coordination committee (ECC) of the cabinet “has recently given approval to a proposal to restructure both the gas utilities by separating the gas transmission and distribution activities on the pattern of Wapda.”
The Asian Development Bank (ADB), which had floated this proposal, is providing technical and financial assistance to study the unbundling of transmission and distribution of both the gas utilities, these sources said.
The government, these sources said, has also formulated a strategic plan for the restructuring and privatization of the natural gas and petroleum sub-sectors. Under the policy initiative, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) would be unbundled, corporatized and eventually privatized.
The sources termed the proposed unbundling of two gas utilities as second generation reforms in the energy sector, following unbundling of Wapda, independent and private sector board of directors of petroleum companies and preparation of big units like PSO and OGDCL for privatization.
The two state-owned gas utilities undertake the purification, transmission and distribution of natural gas in the country. The natural gas is being transmitted and distributed by SSGCL in the southern part of Pakistan and by SNGPL for the middle and northern part of the country.
The combined transmission network is about 8,000 km of high pressure and about 55,000 km of distribution mains.
The government has also asked the Oil and Gas Regulatory Authority (OGRA) to work out a detailed mechanism to bring cost of gas purchase at same level by SSGCL and SNGPL to maintain consumers uniform gas price all over the country after the unbundling and privatization.
Sources said the government believed that since the line losses of the two utilities were within the manageable level of 6-8 per cent at present, it was right time to break them into separate distribution companies on regional basis and if possible, separate companies for big cities and then put them for sale.
However, the transmission system would remain under one management and would act as a “common carrier”. This would mean that gas produced from each and every gas field would be put into one national transmission system (common carrier) which would then sell this gas to various distribution companies on a competitive basis.
The OGRA would be responsible for calculating pipeline tariffs for the common carrier and then for the distribution companies. It would also be responsible for balancing out the distribution network of various distribution companies so that cost of delivery is almost equal for all the companies, and consumers get gas supplies at uniform rates throughout the country.
