April 30, 2008	Wednesday	Rabi-us-Sani 23, 1429

KARACHI, April 29: The Sui Southern Gas Company’s demand for an increase in gas tariff and matters pertaining to unaccounted for gas (UFG) losses are expected to be taken up by the board of directors in its meeting scheduled for Wednesday, it has been reliably learnt.

The meeting was called amid reports that some legislators had taken serious notice of the gas company’s demand with the Oil and Gas Regulatory Authority for an increase in tariff in view of its negative impact on the industry, especially the textile sector, sources said.

The board of directors would hold the usual audit meeting and settle matters relating to various transactions.

Besides, sources said, notice had also been taken of reports about losses incurred by the company due to leftover debris in the new pipeline. It may be pointed out that the pipeline, which had created about 35 per cent spare capacity, was laid at a cost of about Rs3 billion borrowed from a bank on a high mark-up.

The expenditure was made despite the fact that the company had spent about seven million dollars last year on a compressor station in Hyderabad, after shifting it from Sui. But then the station was closed after six months because the company had laid a parallel line to Karachi.

Expressing surprise, experts wondered this extra capacity was created when no gas fields were discovered to supply gas.

Keeping in view the fact that gas will come either in the form of the liquefied natural gas (LNG) or through the Iran-Pakistan-India pipeline in future, such a huge investment had created burden on the utility that caused it to ask for increase in tariff.

The SSGC, sources said, paid three million dollars for feasibility of an LNG project although the utility does not have a share in it. They alleged that the utility because of ill-advised investment had projected a shortfall in the revenue requirement for financial year 2008-09 at Rs26,625 million, seeking increase by Rs69.37 per MMBTU from July 1, 2008, in its average prescribed price. The cost of gas is linked to the international price of crude oil / fuel oil in accordance with the agreements between the federal government and the gas producers.

Ogra is expected to give its verdict on the Sui Southern Gas Company’s demand for a price hike sometime in May.