Amid penalties, SSGC nears financial collapse

After the Pakistan Steel Mills, Pakistan Railways and Pakistan International Airlines, another public utility – the Sui Southern Gas Company (SSGC) – is on the verge of financial collapse due to the continued intervention in its affairs by the Oil and Gas Regulatory Authority (OGRA), Pakistan Today has learnt.
With almost all major state-run organisations turning into white elephants for the cash-strapped federal government over the recent years, the SSGC is considered as the only public institution having a better reputation among its consumers.
Reliable sources in the SSGC told Pakistan Today that the gas consumers in the two southern provinces of the country, Sindh and Balochistan, will have to suffer from severe gas shortages in the future as the gas utility nears the verge of financial collapse.
In a letter available with Pakistan Today, acting SSGC general manager (Distribution, Development Projects) Shakir Aleem has informed Additional Chief Secretary (Development) Malik Asrar Hussain about the worsening financial standing at the government-owned gas utility due to the penalties imposed by the OGRA.
In the letter, Aleem has stated: “In the light of present energy crisis in the country, the SSGC is performing a key role of providing natural gas to industrial, commercial and domestic customers. [However], the SSGC’s financial health is steadily deteriorating due to imposition of financial penalties on account of Unaccounted for Gas (UFG) benchmark set by the OGRA.”
According to the SSGC general manager, the fines are eroding the financial strength of the [gas] company.
The letter adds: “Gas distribution companies were established in the mid-1950s (Karachi Gas and Indus Gas Company) and the pipeline network was laid in the urban areas like Karachi, Hyderabad and others. The existing gas distribution pipeline network has now become overloaded and dilapidated, requiring massive rehabilitation, reinforcement of deteriorated segments.”
“The [SSGC] plans to undertake a massive rehabilitation of pipelines, up-gradation of CP and metering systems in a bid to bring down the UFG to an acceptable level.
“This will require deploying all financial and technical resources to achieve the task in time, not only to avoid further penalties by the OGRA but also to help in improving the energy situation of the country by saving precious gas.
“Accordingly, all the internal funding arrangements will need to be redirected towards achievement of this objective,” the letter concluded.
The country is going through an acute gas shortage, with violent protests and strikes becoming an order of the day. The shortage blamed on reduced supply from the gas fields, has led to industries shutting downs and the workers protesting on losing their jobs.