July 19 - 25, 2010

The intricacies of the growing circular debt not only are affecting performance of different segments like fuel supply companies including fuel oil and natural gas, power generators and the distributing utilities but also disrupting social economic developments in the country.

It is interesting to note that Sui Southern Gas Company, having a franchise of Sindh and Balochistan, is also trapped in the vicious cycle of circular debt and facing liquidity constraints due to a sizeable amount of over Rs20 billion outstanding against KESC.

KESC on its part has a valid point of non-payment of electricity bills by various government organisations while a major chunk of over Rs9 billion is stuck up against Karachi Water & Sewerage Board (KW&SB). The electricity utility is willing to retire at least half of the SSGC bills as soon as the outstanding is cleared by the KW&SB.

Dr Faizullah Abbasi, Managing Director & CEO SSGC having a vision to make SSGC a world class utility on the back of his vast experience and international exposure to his professional credit expressed his concerns over problematic attitude of KESC especially in view of ever increasing outstanding payment as the SSGC was supplying over 210 mmcfd to KESC but not getting even the current bills. This situation has to be resolved amicably to enable the two utilities to carry on smoothly in the larger interest of the people and the economy.

Dr. Abbasi assumed office of MD SSGC in January last to take up another problem area of Unaccounted for Gas (UFG) in which a major chunk goes into gas theft. Currently, the average UFG losses are eight percent which means around Rs8 billion which have to be plugged by using all possible checks, he said.

Dr. Abbasi is a PhD in Metallurgical Engineering from Sheffield UK and has decided to use information technology to check this menace. SSGC has acquired a software having capacity to monitor even a domestic household for its gas consumption. Currently this project is a being carried out as a pilot project and will take over the entire gas map in its franchise area to minute scan the real spot of leakage.

When asked why KESC is not applying this technology to plug the huge leakage of power at a much larger scale of 37 percent, he disclosed that SSGC has recently signed an MoU KESC and if they have the will to stop power theft this technology can help to a great extent.

When asked to comment on the gas supply situation and the demand growth, Dr. Faizullah said that in fact the demand was growing tremendously while the supply side was static hence the gap between demand and supply was feared to escalate by 2014. He however said that one of the effective steps taken by the SSGC to bridge the gap between demand and supply is the development of a LNG terminal at Port Qasim which would share the burden especially in power generation area.

Replying to a question he said that almost 90 percent of the gas intake by SSGC comes from Sindh while remaining 10 percent is fed from Balochistan.

He pointed out that there is a huge untapped gas reserves called tight gas concealed in the rocks of the depleted gas fields. This tight gas reserves can be realised through hydro cracker technology. He was of the opinion that development of the proven gas reserves as well as the TGR needed to be explored on war footings to meet future demands besides import of gas from external resources.

It may be mentioned that over 33 trillion cubic feet of Tight Gas Reserves are lying untapped in the country. The government however has drafted a new policy to tap huge tight gas reserves in the country.

According to a survey over 33 trillion cubic feet of TGR are estimated at upper and middle Indus and Kirthar areas. The tight gas reserves are 120 percent of Pakistan's existing reserves where development process has to be accelerated in the face of persisting energy crisis.

The TGR potential of lower Indus, Potwar, Kohat and offshore areas is yet to be established. It is expected that the new policy on TGR which is in the pipeline will open a new vista of investment and reserve additions in unconventional but highly promising areas and the focus of the forthcoming gas policy seems to be on early production from known TGR fields.