July 4, 2003	Friday	Jumadi-ul-Awwal 3,1424

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ISLAMABAD, July 3: The SNGPL and SSGCL are in a dispute over the exclusive rights of natural gas assets, transmission, distribution and sales in Sindh and Balochistan as the government moves ahead with restructuring and deregulation of oil and gas sector.

The two companies have counter-claims over the ownership of a large natural gas system and exclusive business rights particularly in Kashmore and Daharki areas, petroleum ministry sources told Dawn.

While the Sui Northern Gas Pipeline Limited (SNGPL) has applied for a licence to continue with the exclusive rights in its existing areas of operation, the Sui Southern Gas Company Limited (SSGCL) is contemplating to take over the customers, transmission and distribution system of the SNGPL in Sindh and Balochistan.

The sources say this is the reason that the Oil and Gas Regulatory Authority (Ogra) is unable to issue transmission, distribution and sale of gas licence to the two gas utilities.

Earlier, there was no problem because both the companies were attached to the departments of the petroleum ministry, but as part of deregulation, the two companies required to be given licences and unbundled before privatization.

The two companies are required to be issued the licence under the Ogra Ordinance 2002, to comply with the donor assisted deregulation and restructuring programme of the oil and gas sector.

These sources said the SSGCL had submitted its formal objection before the Ogra that the SNGPL should not be granted an exclusive licence for the transmission, distribution and sale of natural gas in part of the SSGCL’s areas of operation.

“Such infringement in the SSGCL’s franchise area is in contravention of the basic premise of the exclusive licence,” says SSGCL Managing Director Munawar B. Ahmad.

Both Sindh and Balochistan are the SSGCL’s area of operation for carrying out regulated activities of transmission, distribution and sale of natural gas. However, since the SNGPL purchases bulk of its gas supply from these areas, it also supplies the gas to some customers in these southern provinces that are in proximity to the transmission system.

The SNGPL also laid a distribution network in Kashmore town and extended an industrial connection for M/S Liberty Power Limited at Daharki.

The SSGCL pleaded that in order to streamline mid-stream and down-stream natural gas business in Pakistan and to hold utility companies accountable for natural gas transmission and distribution activities, the respective areas of operation of both the companies should be clearly demarcated in line with provincial borders.

The company says Sindh and Balochistan should thus be demarcated as the SSGCL’s area of operation while rest of the areas of Pakistan as that of SNGPL’s.

From this, both the utilities will benefit which eventually will be passed on to the natural gas customers in the country, says the SSGCL’s managing director in a letter to the Ogra chairman.

He says that in the context of proposed restructuring and unbundling of the gas companies prior to their privatization, it is essential that franchise areas of both companies be clearly defined, without overlapping or without creation of islands in each others franchise area as such anomalies will lead to creation of bottlenecks at the time of licence transfer to the new transmission and distribution entities.

In this regard, the SSGCL has made a case to acquire SNGPL’s natural gas customers, and transmission and distribution system in Sindh and Balochistan.

It has also offered to provide natural gas transmission facilities to the SNGPL from its allocated field in SSGCL’s area of operation on the payment of transportation charges in line with the Ogra rules and procedures.