PESHAWAR: The Khyber Pakhtunkhwa government has expressed its inability to pay billions of rupees to the Sui Northern Gas Pipelines Limited for legalising gas connections in the two major gas producing districts of the province over shortage of funds.

The development comes almost four months after the provincial government assured the petroleum and natural resources ministry of the Rs6 billion payment to the SNGPL for regularising illegal gas connections in Karak and Kohat.

The issue came under discussion during a last week meeting chaired by Chief Minister Pervez Khattak.

The federal petroleum and natural resources secretary, provincial chief secretary, and senior SNGPL and relevant provincial government officials were also in attendance.

It is learnt that the provincial government will contact the Bank of Khyber to provide loan for the gas connection regularisation, while the SNGPL will carry out feasibility study for the project in Karak.

SNGPL needs Rs6bn to regularise gas use in Karak, Kohat

An official said the SNGPL management had demanded Rs6.6 billion to regularise illegal connections in Karak and Kohat.

He said of the money, Rs4.07 billion was needed as grant and Rs2.5 billion for ‘consumer criteria’.

He said of the required money, Rs 2.5 billion was needed for consumer criteria whereas SNGPL required Rs 4.07 billion as grant.

The relevant officials said provincial chief secretary Amjad Ali Khan told the meeting that the provincial government faced serious budget shortfall and was not in position to arrange huge funds for the project.

They said the chief secretary said there was a possibility to borrow loans from banks for the purpose.

Huge deposits of oil and gas were discovered in Karak and Kohat districts in 2004-05.

Khyber Pakhtunkhwa produces around 40,000 barrel oil per day, which is half of the country’s total production, while its gas production totals 370 MMCF per day.

However, gas hasn’t been provided to major parts of Karak and Kohat district forcing their residents to secure illegal connections from the main pipelines.

The officials said illegal gas connections had been obtained for commercial activities in the region, especially in Karak.

They said local communities pooled money to get illegal gas connections for their villages from the main pipeline, which passes through their areas for supply to other parts of the country.

The federal and provincial government had announced supply of gas to domestic consumers in 38 villages of Karak district.

The SNGPL had got the payment for the purpose around five years ago.

However, gas hasn’t been supplied to domestic consumers in the said villages yet causing gas theft.

The officials said the massive pilferage of gas in southern districts of the province was a matter of concern for the SNGPL.

According to them, illegal gas connections cause huge financial losses to the national exchequer.

The officials said the last week meeting was informed that the losses in gas producing districts of the province made two per cent of the overall SNGPL losses.

Published in Dawn, June 12th, 2014