Gas (Theft and Recovery) Act 2016 spurs SSGC into a decisive action
Natural gas is the biggest source of primary energy with a share of 46% in the energy mix, followed by oil, contributing another 35%. Pakistan can also boast of one of the largest pipeline networks for gas distribution in the world of more than 145,000 kilometers, servicing more than 8 million customers. SSGC and SNGPL are the two main gas distribution companies operating in their designated geographical areas.
One of the key technical issues being faced by a utility company around the world is that of line losses. Globally, the transmission and distribution losses in the natural gas sector are less than 10 per cent of the total production. In case of Pakistan, it is around 15% but may go all the way to 60% in some areas. Let us take the example of SSGC and SNGPL. Compared to other public sector entities, both these companies have a comparatively sound reputation, especially when it comes to implementing their core activities of transmission and distribution projects in a cost-effective manner, while incorporating best business practices in day to day affairs. They have successfully incorporated state-of-the-art technology in their operations, and have adopted a refreshing customer-centric approach that can be compared to any top utility in the region.
This is just one side of the story, however. For many years, both SSGC and SNGPL have been plagued by a major menace of line losses, which in the natural gas industry terminology is labeled as Unaccounted-for-Gas or UFG. Definition-wise, UFG is the difference between the amount of gas purchased and the quantity of gas sold. In other words, UFG is the inevitable imbalance that exists at any given time between the measured gas coming into a utility’s distribution system and the measured gas going out of the same system. This difference is treated as Unaccounted-for-Gas by the regulator – OGRA or Oil and Gas Regulatory Authority in this case – which builds a form of reimbursement for this gas into the utility’s tariff structure.
Ask any manager from one of the two gas utilities about the biggest challenge his company faces and the instant reply will be ‘UFG’. For all intents and purposes, UFG is a serious issue since every 1.2% increase in UFG means that the Regulator takes away Rs. 1.2 billion from the gas companies’ profits as a penalty.
While there is no doubt that there is heavy price to be paid for increasing UFG volumes, we also need to look at the factors that have contributed to rising trend. The major contributing factor is gas theft, which constitute, according to industry estimates, more than 35% of UFG.
Although in the past, a legislation was promulgated to rein in gas theft, efforts by the gas companies to control gas theft did not make much inroads. Unfortunately instead of using gas legally, gas thieves have resorted to using gas in many different ways. They can bypass domestic and industrial meters, run heavy generators, use unauthorized connection, damage transmission lines, tamper with gas pipelines and still get away with the crime scot free. Then in 2016, National Assembly of Pakistan passed Gas (Theft and Recovery Act) 2016 that imposed heavy penalties on those offenders engaged in various types of gas theft.
Almost at the instinct, SSGC, already burdened by rising UFG levels, got spurred by the Act to take stringent measures against gas theft cases. Backed by SSGC Police that was established in 2015 to facilitate Company’s raiding parties to take legal action against gas thieves, as well as other law enforcing agencies such as Sindh Rangers, the Company’s Security Department, now revamped as Security Services and Control Gas Theft Operations (SS & CGTO) Department, have been conducting raids on commercial and industrial customers, with an unprecedented vigour. FIRs are being lodged and arrests are being made. In short, no mercy is being shown on the miscreants who are proving to be a major drain on both the Company and country’s resources.
SSGC’s efforts have been further boosted by the establishment of more than 26 gas utility courts in Sindh and Balochistan, as defined in the Act, to take punitive action against the offenders and serve them punishment commensurate with the type of theft committed. The Act also gives other privileges’ to the gas utility in bringing the thieves to book including giving any Grade-17 officer power to search any premises where gas is supplied or consumed in a manner that is regarded as offence.
The SS & CGTO Department has been structured on more result-oriented lines, whereby experienced civilians and law enforcement officials are taking care of its gas theft intelligence, prosecution and operations wings. The Department has undertaken a number of intelligence based operations across Sindh by conducting raids on those commercial and industrial units that were involved in blatant gas theft. Apart from arrests and FIRS, claims are raised against the volumes that were being stolen.
SSGC is determined more than ever to uproot the menace of gas theft. In a recent media briefing, its management termed gas theft as a crime against community and requested for media support to create awareness about the seriousness of this crime to the common people. SSGC is encouraging people to report any incident of gas theft on a designated email and whatsapp messaging, with a promise of a reward to the information provider as per the Act.
SSGC has always been serious in combating gas theft. Spurred by the Gas (Theft and Recovery) Act 2016, there is a new determination and a strong resolve to put a stranglehold on gas theft. In this effort, the Company is seeking the support of the general public and the media to make it a win-win situation for all concerned.