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August 28, 2018

Outstanding payments of SSGC, SNGPL pile up to multibillion rupees


August 28, 2018

ISLAMABAD: Pakistan’s two major state-run natural gas companies have hundreds of billions of rupees in outstanding payments, making their business operation difficult and weakening their financial health, officials said on Monday.

The ever-increasing receivables of the gas companies and the difference between the purchase price and the sale price are instrumental in increasing circular debts for the gas utilities, the officials told a meeting of the Senate Special Committee on Circular Debt.

The committee met with senator Shibli Faraz presiding over the meeting. Amjad Latif, managing director of Sui Northern Gas Company Limited (SNGPL) said the Water and Power Development Authority owes it Rs5.5 billion, while the industrial sector has to pay Rs7.68 billion to SNGPL. Besides, the company has to recover Rs123 billion as natural gas development surcharge and another Rs2.3 billion from consumers.

Latif said SNGPL’s gas purchase price is Rs629/million metric British thermal unit (mmBtu), while sale price to consumers is Rs399/mmbtu, “so we are facing a loss of Rs230/mmbtu”.

“We are buying costly gas while selling it to consumers at cheaper rates,” he added. “For the last five years, gas prices have not been increased so the hardships for the company are increasing.”

SNGPL’s official said re-gasified liquefied natural gas arrears are cleared fortnightly, while payments to other gas sources are kept unpaid for years.

SSGC officials informed the committee that the K-Electric owes more than Rs80 billion and Pakistan Steel Mills has to pay off Rs55 billion to the gas utility.

Under the head of tax refunds, the company has to receive Rs50 billion. Outstanding amount against the consumers stands at Rs28 billion. Member Finance of Oil and Gas Regulatory Authority (Ogra) said governments take political decisions which create hardships for companies. Ogra can only give advice to the government and cannot take decisions.

He said the Ogra had advised the caretaker government to increase gas prices, but the decision was left for the new government.

“Now, the PTI (Pakistan Tehreek-e-Insaf) government may take this decision if it wants.” Senator Faraz asked SNGPL and SSGC to launch an awareness campaign for consumers to stop wastage of gas and also encourage them to use efficient appliances.

Faraz opposed inclusion of taxes in electricity and gas bills. He said the poor is unable to pay the charges. From production to distribution, the poor are paying for the theft of others.

The current high prices of gas and electricity are compelling the consumers to go for energy theft. The committee asked Ogra to share with it a concise solution to the matter of dealing with the accumulated payables.

The committee members said there has to be work on a long-term mechanism to deal with the problems of payables and receivables of the companies.

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