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December 6, 2018

SNGPL’s unaccounted-for gas losses swell 33pc in 1-1/2 years


December 6, 2018

LAHORE: Unaccounted-for gas (UFG) losses of Sui Northern Gas Pipelines Limited (SNGPL) has swelled more than one-third within less than one and half years thanks to poor management in the state-owned utility, sources said on Wednesday.

Annual UFG losses climbed to as high as 10.8 percent from 8.07 percent achieved by end of the fiscal year of 2016/17.

SNGPL management, including its managing director, did not respond to the scribe’s queries about failure of the company in arresting upward trend in UFG losses.

Minister for Petroleum and Natural Resources Ghulam Sarwar Khan said the gas utility’s losses are hovering around 11 percent, which amounts to Rs22 billion, as one percent of lost gas volume has a value of two billion rupees.

“It is actually a journey to the past for the top management of SNGPL. Losses of the natural gas utility were as high as 11.17 percent back in 2012/13,” an industry insider said.

UFG is calculated as the difference between the metered gas volume injected into the transmission and distribution network and the metered gas delivered to the end consumers according to a definition in an independent study of gas utilities.

UFG losses of SNGPL are almost six times greater than the international standard, while it is about double the limit allowed by the Oil and Gas Regulatory Authority (Ogra).

The sources said a major portion of the UFG losses comprises of theft ‘allegedly’ with the connivance of the gas utility’s officials.

UFG losses of gas utilities have been on the rise since mid-2017 after showing downward trend in the preceding years. There has been nearly three percent increase in SNGPL’s UFG losses since then, which amounts to about six billion rupees per annum.

Ironically, there is no letup in gas losses despite a joint study on UFG by the utilities, including Sui Southern Gas Company.

When attention of the Ogra’s top management was brought to the high losses of SNGPL, chairperson of the regulatory authority Uzma Adil Khan expressed commitment to curb UFG practice.

“Ogra will only allow the benchmark UFG,” Khan said. “Gas companies will suffer themselves with disallowances.”

Sources, commenting on steep rise in UFG losses of gas utilities, said there is need to adopt a strategy to implement the internationally-accepted techniques to monitor and reduce the losses.

They said SNGPL management failed to enhance capacity of the company to reduce unaccounted-for gas losses. UFG losses beyond the normal values results in unjustified price increase to be borne by the consumers, they added.

The sources further said SNGPL failed to address the main causes of the spike. The study, however, said underlying factors of UFG losses are theft, pipeline leakages and measurement problems.

Aging pipes are prone to leakages if not maintained, weak or faulty measurement equipment hampers vigilance of supplies to densely populated areas, and remote areas in domestic sector are susceptible to theft, according to the study’s findings.

Ogra set a benchmark of 6.3 for UFG losses and that could be included in the tariff for the last fiscal year of 2017/18. The authority fixed the benchmark while deciding the sale price.

The ratio was, however, more than what was demanded by the Sui Northern Gas Pipelines and Sui Southern Gas Company.

The gas utilities urged the authority to fix the benchmark at 9.21 percent. But, the Ogra figured out UFG at five percent plus 1.3 percent as allowance of local conditions.

The authority set the UFG benchmark keeping in view the key performance and monitoring indicators to be followed by the gas utilities.