KARACHI, May 20: Sui Southern Gas Company (SSGC) on Thursday signed a memorandum of understanding (MoU) with a consortium of five commercial banks for a syndicate loan finance of Rs3 billion.

The loan is of five years, including a gross period of two years on a very low interest rate. The financing is being provided on equal basis by five commercial banks - Habib Bank Limited, National Bank Limited, United Bank Limited, Muslim Commercial Bank Limited and Standard Chartered Bank Limited.

SSGC Managing Director Munawar Baseer Ahmad informed a news conference that the loan would be utilized for financing the first portion of a five-year core investment plan of Rs36.7 billion. He said the company was taking a number of initiatives to ensure sustainable supply of natural gas to its customers.

The expansion programme, he said, would increase the gas availability by 50 per cent, from 1,200 mmcfd to 1,800 mmcfd in next five years. The share of natural gas in the energy mix will also consequently increase the supply of gas, from presently 44 per cent to over 50 per cent, thus saving valuable foreign exchange and reducing fuel costs to the industry.

SSGC is planning to lay additional high pressure transmission lines of 600 km and distribution lines of 6,000 km to bring additional gas from the newly-discovered fields of Khipro, Sanghoro and Zarghoon.

According to a SSGC press release, Habib Bank President Zakir Mahmood said that while the economy was benefiting from the macroeconomic stability, rise in foreign exchange reserves, cut in inflation and increase in the GDP, there were some concerns about the long-term availability of natural gas, since demand was likely to exceed supply beyond the year 2010.

The SSGC MD explained that the government was examining three gas import options from Turkmenistan, Qatar and Iran. It is likely that a decision on one of the pipeline projects will be taken in the near future.