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TMCNet:  LNG TO REPLACE OIL FIRED POWER GENERATION

[May 26, 2014]

LNG TO REPLACE OIL FIRED POWER GENERATION

(Pakistan & Gulf Economist Via Acquire Media NewsEdge) NO MORE LICENSES TO CNG STATIONS INTERVIEW: ZUHAIR SIDDIQUI, MANAGING DIRECTOR, SUI SOUTHERN GAS COMPANY PROFILE OF ZUHAIR SIDDIQUI ZUHAIR SIDDIQUI the Managing Director Sui Southern Gas Company, is a highly experienced professional in different areas of management.


Zuhair Siddiqui, is also the Chairman of the Company’s fully owned subsidiary SSGC LPG (Pvt) Ltd. Prior to becoming the MD, Mr. Zuhair Siddiqui was DMD (Corporate Services) in charge of Management Services, Information Technology (IT) and Customer Services divisions. Before assuming his current position, Mr. Zuhair Siddiqui has had prolific stints as SGM (MS) and SGM (CS) in charge of various key departments including Customer Relations, IT, Telecom and Services, Human Resource, Administrative Services and Corporate Communications. Mr. Siddiqui joined SSGC in September 2001 as GM (IT). In this capacity, he provided technology vision and leadership for developing and implementing IT initiatives that helped SSGC become one of the most IT-enabled enterprises in Pakistan. Before joining SSGC, Mr. Siddiqui held important senior management position in Management Information Systems in Civil Aviation Authority (CAA).

He began his illustrious career as Trainee Engineer in Hewlett Packard, USA and went on to work in a number of US Companies including Advanced Micro Devices, National Semi-Conductor in key engineering positions. Mr. Siddiqui is an M.S. Electrical and Computer Engineering from Oregon State University, Oregon, USA and B.E. Electronics Engineering from the University of Karachi.

SSGC COMPANY PROFILE: Sui Southern Gas Company (SSGC) is Pakistan’s premier gas utility that serves its franchise areas of Sindh and Balochistan. The Company is involved in the core business of transmission and distribution of gas as well as design and implementation of gas transmission and distribution projects. The Company operates more than 3,492 kms of high-pressure transmission network and over 42,000 km of distribution network.

Commencing operations in 1954 as Sui Gas Transmission Company (SGTC), SSGC has a rich infrastructure and a history of being a customer-centric public utility.

Being a downstream company, the Company buys gas in bulk from more than twenty local and foreign Exploration and Production Companies (E and P) companies, for distribution across its franchise areas. The Company delivers natural gas to over 2.54 million customers comprising more than 4,120 industrial, 24,184 commercial and 2.51 million domestic customers. As a non-core function, the Company operates Gas Training Institute at its Karachi Terminal facility to provide external training to internal and external stakeholders in various technical and non-technical.

In 2012-13, the Company completed a number of distribution projects including Jhal Magsi, Sinjhoro, Kunnar Pasakhi, Mehar, Rehman and Nar Baghla against a cost of Rs3.432 billion and covering a distance of more than 290 kms. With the commissioning of these and other upcoming projects such as Zarghun pipeline project (Scheduled for commissioning by December 2013) some 235 mmcfd gas will enter into the Company’s system.

The Company is also moving full gear into mega sustainable projects such as LNG retrofit terminal scheme and a number of Synthetic Natural Gas (SNG) for augmenting gas supplies.

The Company also owns and operates the only gas meter manufacturing plant in the country. In 2012-13, the Meter Plant produced 690,129 gas meters compared to the production of 675,521 gas meters of year 2011-12. The plant also supplied 538,750 gas meters to SNGPL and 166,119 gas meters to SSGC to fulfill the requirement of gas meters for new connections and scheduled replacements.

SSGC recently acquired a subsidiary company located at Port Qasim Authority (SSGC-LPG Subsidiary) involved storage, bottling, distribution and marketing of LPG to meet the rising local demand. The filling plant at Port Qasim, Karachi has a fully automated LPG cylinder filling facility whereas another plant is operated near Haripur in Hazara District. The terminal has a 3.5 km trestle and a jetty capable of handling vessels up to 15,000 DWT. The bulk storage capacity is of 6,500 MTs. The draught at the jetty has been increased to 10.5 meters to accommodate larger vessels mainly for supply to the Synthetic Natural Gas (SNG) or LPG-Air Mix Plants projects. During FY 2012-13, the Company handled imports of about 30,000MTs of commercial imports and 3,000 MTs for use within its own network. Sales for the current fiscal year were about 8,000MTs and are projected to increase significantly in FY 2013-14.

One of the key challenges faced by SSGC is the widening demand and supply gap in natural gas. The projected committed gas demand is 1, 423 and supply is 1,109 which imply a shortfall of 314 mmcfd. In this regard, the Company followed an ECC-approved gas load management plan whereby domestic and commercial customers are given top priority followed by power sectors, general industries, cement and CNG sector.

The Company is faced with numerous challenges on transmission and distribution front, one of them being the issue of Unaccounted for Gas (UFG) or line losses. The Company wants to bring down UFG levels to acceptable levels and is deploying a US$ 200 million World Bank loan/credit arrangement (Natural Gas Efficiency Project) to assist in achieving this goal.

Unaccounted for Gas (UFG) or line losses is definitely the biggest challenge faced by SSGC and is affecting the Company’s overall efficiency. A number of factors have contributed to rising UFG levels in the recent years. Gas theft, underground and overhead gas leakages, measurement errors, shift of sale from Bulk to Retail customers, third-party damages, volatile law and order situation and major population shift to urban centers leading to a phenomenal growth in non-customers have further deteriorated the UFG situation.

SSGC has been able to arrest the rising UFG level by bringing it down to about 2 percent in FY 2012-13. The Company undertook an ambitious program of segregating its distribution network into manageable units to ensure greater efficiency, transparency and accountability. Apart from intensifying raids in gas theft infested areas in Sindh and Balochistan, bulk meters are being installed in targeted areas to ensure proper recording and calculation of lost volume. Besides, the Company has been working towards inducting new technologies including installation of smart meters especially for industrial and commercial customers, laser leak detection devices.

SSGC is widely acknowledged for its world-class expertise in the engineering, design, construction, operation and maintenance of an extensive gas supply infrastructure and is fully capable of providing innovative gas technology solutions to other companies in the region. The optimal use of technology across all functions has earned the company the reputation of Pakistan’s most technology-enabled utility. The Company has almost completed the customization of IBM Rational Focal Point and Rational Team Concert for the Gas Pipeline Rehabilitation process. These applications will facilitate Natural Gas Efficiency Project (NGEP) and Gas Distribution departments in Project Portfolio Management. Both applications are web based and support the automation of Project Management knowledge areas.

For the first time in SSGC’s history, the performance review process was completed in July 2013. This was made possible due to focused trainings of the online system which is Oracle ERP-based. HR champions were utilized as coordinators to facilitate the training, coordination and compilation of results and subsequently updating hierarchy of their respective departments on two level bases i.e. Initiator and Approver. The synergy between top management and various departments within the organization resulted in timely execution of the process and release of increments and bonus payment across the board.

The Company has made a visible impact in the area of Corporate Social Responsibility by focusing its efforts in education, environment and community development. In 2012-13, the Company provided monetary support to a number of leading business schools and engineering institutes and universities including NED University for Engineering and Technology (NEDUET) and Institute of Business Management (IoBM) in Karachi, Balochistan University of Information Technology and Management Sciences (BUITMS) and Balochistan Institute of Technical Education (BITE) in Quetta, Sukkur IBA and Forman Christian College (FCC), Lahore for providing scholarships to the deserving students belonging to its franchise areas enrolled there in varied disciplines.

The Company has also provided funds to supplement educational initiatives of reputed educational institutions such as The Citizens Foundation and Family Educational Foundation Schools to help its deaf children.

In the area of health care, SSGC has provided monetary support to reputable institution such as Dowites 78 Operation Theatre, Chhipa Foundation, Omair Sana Foundation, Darul Sakun (center for physically challenged children) and Children Cancer Hospital, among others. In the area of community development, SSGC provides funds to Thardeep Rural Development Program to help it in developing dug wells for providing potable water to village communities.

Natural gas in Pakistan is heavily overloaded due to ever increasing demand on one hand and very sluggish growth in new discoveries, which has left no option but to meet the gas demand through load management in Sindh.

In order to balance the demand pressure, efforts are under way for development of infrastructure facility including LNG terminal at Port Qasim for import of LNG by early next year. The imported LNG will replace fuel oil for power generation. With this arrangement not only the import bill on account of oil imports will be reduced but the cost of power generation may also come down, said Zuhair Siddiqui, Managing Director Sui Southern Gas Company in an interview.

PAGE: WOULD YOU LIKE TO SHARE THE DEMAND AND SUPPLY POSITION IN SOUTHERN ZONE (SINDH and BALOCHISTAN) UNDER FRANCHISE OF SSGC? ZUHAIR: At the moment a total volume of 1150-1200 mmcfd of gas is available at SSGC for distribution in Sindh and Balochistan. As far as demand is concerned it varies in accordance to the weather conditions for example during the summer season the demand for gas is estimated at 1350-1400mmcf while it goes up to 1500mmcf during winter season.

On the back of availability of gas on an average, the province of Sindh facing a shortfall of 20 percent which at present being overcome through load management of the gas. We have to stop supplies to CNG stations for two days a week and similarly for industrial consumers.

The supply of gas to major consumers like power generating sector or fertilizer sector depends on availability of gas; however, the domestic consumers are not affected and supplied uninterrupted supply of gas being the social responsibility to cater to the need of the people as the first priority.

PAGE: CAN WE EXPECT THAT WITH THE COMPLETION AND LNG TERMINAL AND RESUMPTION OF LNG IMPORT THE SITUATION OF GAS SHORTAGE WILL IMPROVE TO THE SATISFACTION OF THE CONSUMERS? ZUHAIR: Certain, the beginning of LNG import will have a big impact on power generation as the LNG will be imported exclusively to replace costly fuel oil, which is a huge burden on the economy while it will ensure sustainable supply of gas to the power generating sector. Hopefully the situation will take a turn around on the gas horizon definitely.

PAGE: THERE ARE REPORTS ABOUT LINE LOSSES AND STORIES ABOUT GAS THEFT IN SSGC DISTRIBUTION NET WORK WOULD YOU LIKE TO ENLIGHTEN US WITH THE REAL PICTURE ON THIS ACCOUNT? ZUHAIR: Unaccounted for Gas (UFG) which stands for line losses and theft incidence costing a loss of about 110mmcf per day to the SSGC system. As far as line losses are concerned, which come to around 6 percent is an essential evil and acceptable in any system around the world and has to be borne especially in such a huge retail network in our case. However, the incidence of theft is naturally a matter of concern and the SSGC is taking all possible measures to plug the loopholes. However, the bad law and order situation especially in Karachi is one of the reasons for power theft due to emerging of so called no go areas in certain areas of the city. Although we are on it to carry out effective crackdown on such black spots where gas is being stolen, however, it requires a strong legal cover and administrative support to completely wash them off from the society, because these no go areas have emerged on the back of support from influential political or other support.

While the acts of terror in the province of Balochistan where incidents of blasts on supply net work causing serious losses to the system.

PAGE: GENERALLY SPEAKING THERE ARE COMPLAINTS THAT THE PROVINCE OF BALOCHISTAN HAS BEEN A MAJOR SOURCE OF GAS SUPPLIES YET THE PEOPLE OF THAT PROVINCE ARE DEPRIVED OF THIS FACILITY, WHAT ARRANGEMENTS SSGC SUGGESTS TO ADDRESS THE GENUINE DEMAND OF THE PEOPLE OF BALOCHISTAN? ZUHAIR: In fact there were distribution problems in that province where population is scattered and a supply line network is not workable, however, the present government has chalked out a program for supply of synthetic gas in all major cities of Balochistan and this will help to address the gas supply problem in Balochistan.

PAGE: THERE ARE REPORTS ABOUT SSGC-KESC DISPUTE ON PAYMENTS AND KESC OWES ABOUT RS50 BILLION, WHAT IS THE IMPACT ON FINANCIAL HEALTH OF SSGC AS A HUGE AMOUNT IS HELD UP? ZUHAIR: Yes this was the problem between the two utilities, however, we have recently resolved the issue by inking an agreement for the first time and now the KESC will clear the backlog within a period of next three years while the current bill is being paid on time, which means that issue of non-payment has been resolved amicably.

PAGE: In government owned organizations there is always a problem of political intervention and pulls especially in respect of appointments under political pressures, what is the situation in SSGC? Zuhair: After a pause, yes we have to live within the given conditions, as far as strength of workers in SSGC is concerned at present SSGC has 8,000 employees on its payroll while against the capacity of 5,000 which means 3,000 are surplus, yet we are managing it, however, as the creation of jobs and addressing the issue of unemployment is also the responsibility of the government.

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