close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
June 8, 2021

High LPG prices: JJVL LPG extraction plant awaits nod of SSGC for gas supply

ISLAMABAD: Amid the LPG prices going up in the country, JJVL (Jamshoro Joint Venture Limited) LPG and NGL extraction plant still awaits the nod of Sui Southern Gas Company (SSGC) for supply of gas despite the fact that AF Ferguson & Company (AFFCO), appointed as supervisor by the Supreme Court in its final determination report, has established the commercial and financial viability for SSGC to supply gas to the LPG plant. And more importantly, the consultant’s report has found that setting up a new LPG/NGL extraction plant by SSGC, on current gas available, is unviable.

“Now with AFFCO’s report, Sui Southern Gas Company is also left with no option but to make the JJVL plant operational as it had given the undertaking that it will take the decision on the continuation of the LPG/NGL extraction agreement with JJVL once the AFFCO report had been received. And if the gas company does not accept the AFFCO report, it will be considered contempt of the Supreme Court," a senior official at the Petroleum Division told The News.

However, SSGC seems adamant at defying the AFFCO report and breach its own undertaking given to SC and JJVL, as it has recently given advertisement issuing tenders seeking quotations for LPG imports. The SSGC on June 20, 2020 closed down the gas supply to JJVL capable of producing up to 500 MT of LPG and 150 MT of NGL per day and refused to extend the term of agreement with JJVL despite the letter from the-then acting MD Mohammad Amin Rajput, written on May 30, 2020 to JJVL management, saying that it will extend the agreement with JJVL after getting final determination from AF Ferguson &Co. (AFFCO), who are supervising the JJVL as per the decision of the Supreme Court.

However, by June 20, 2020, AFFCO could not furnish its final report. Now under the latest scenario, AFFCO submitted three months ago with SC, SSGC, and JJVL its final report on LPG plant, saying making the plant operational is beneficial to the SSGC. More importantly, the consultant’s report has found that setting up a new LPG/NGL extraction plant by SSGC, on current gas available, is unviable.

Meanwhile, the JJVL management wrote letters to SSGC and SAPM on Petroleum Tabish Gauhar, asking for restoration of gas to LPG extraction plant, arguing that AFFCO report had established the commercial and financial viability for SSGC to supply gas to JJVL plant. The JJVL letters also say that restoring gas to the plant will be in consonance with the order of the Supreme Court dated December 4, 2013 that clearly says “...People all over the country who cannot obtain natural gas rely on supply of LPG for many of their needs. The supply of LPG to a very large number of users, including those living in far-flung areas is a matter of public importance impacting their ‘life’ as defined by this Court. Such supply, therefore, needs to continue unabated...”

In the same order at para 39, it was stated that: “ .. passing an order to ensure that precious and scarce mineral resources of the nation are not frittered away and nor is the majority interest of the government in SSGC used for mismanaging and wasting national assets."

It is pertinent to mention that SSGC has never imported LPG itself, as its main course of business under license from OGRA, is transmission, distribution and sale of natural gas. A subsidiary of SSGC, SSGC LPG (Pvt.) Limited, on behalf of its customers (LPG marketing companies), imports LPG and provides certain services such as jetty and storage facilities.

Based on the ad-hoc/ provisional percentage of 57% which needs to be finalized/ endorsed by the SCP, there is an outstanding receivable of more than Rs400 million with respect to the last agreement. Furthermore, it is necessary to mention that freight matter on royalty is pending at SCP, which is yet to be concluded. Several other matters pertaining to previous agreements with JJVL are also pending, including arbitration between SSGC and JJVL, which includes billions of rupees receivable from JJVL.

However, the official sources said that the Economic Coordination Committee (ECC) of the Cabinet and the federal cabinet had decided that the supply of gas to JJVL for LPG and NGL extraction should be restored.