Cabinet Committee Considers Separating SNGPL And SSGC

The Cabinet Committee on Energy (CCoE) has been requested by the Petroleum Division to grant approval for the “unbundling” of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), reported a national daily.

According to reports, the next meeting of the Cabinet Committee on Energy (CCoE) will be held on Tuesday to discuss gas sector reforms, particularly the unbundling of the two state-owned gas utility companies SNGPL & SSGC.

Petroleum Division has been actively pursuing the break-up of these two government-owned gas utility companies into different entities in order to ensure the sustainability of the sector and has already devised a way forward to proceed with the gas reform agenda.

This newly devised agenda includes the appointment of a ‘transaction advisor’ through a competitive process, as per news reports. Both companies will equally share the cost of such a process, while Oil and Gas Regulatory Authority (OGRA) will accordingly allow the same in the revenue requirements of the companies, and alternatively, financing from an international donor may be explored to accomplish the task.

The Petroleum Division has also suggested the formation of an independent National Gas Transmission Company (NGTC), which would operate as a common transport carrier for the gas distribution companies, both existing and new, without directly engaging in the sale or purchase of gas.

The reform agenda also includes the establishment of multiple gas distribution companies on a technical and economical basis, keeping in mind population, network, density, gas demand, workload and management, supervision, and efficiency for the sustainability of newly formed Discos. A mechanism of weighted average sale price equalization or any other suitable mechanism would also be developed for gas sale pricing under this reform agenda.

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