Survival of gas companies is mandatory for national prosperity—2

Mahtab Kalhoro

TAMPERING of gas meters has also been a con
tributor to the line losses. Consumers are billed
according to the payment slabs defined by the Oil and Gas Regulatory Authority (OGRA), however those having excessive use of gas, at times tamper the meter in order to keep the reading on a lower side for a lesser bill amount.
In an another scenario, on the consistent non-payment of monthly gas bills, customers have to be disconnected and their supplies are not restored until they settle their dues. Instead of paying the dues, many customers opt for illegal means by directly reconnecting through private technicians, thus adding loses to the utilities.
The above mentioned facts are real facts and not stories that are causing heavy damages to the profitability of both gas distribution companies. These facts are beyond easy control of the companies for which they are penalized by OGRA. The regulator determines their performances under an international benchmark of allowance of line losses which is 4.5%, but the million dollar question remains that whether the law and order situations, no go areas, planned gas thefts by organized mafia, repercussion of decisions like moratorium on gas connections and other socio-economic factors are at par with the international world? A fair answer would certainly be NO, which means that their line losses are bound to be much higher than these international standards where utilities have planned and defined corridors for pipelines, controlled law and order situations, demand never beats the supply and GDP ratios are far better.
The capital investment in these developed countries of the world is much higher than ours as they lay gas pipelines with huge diameters that do not require high pressure to be maintained, whereas our pipeline with comparatively far lesser diameters need pressure boasting that also results in higher UFG levels as the high pressure would magnify the amount of gas lost through leakages in the aged out pipelines. In light of these real facts would it be fair for the regulator to penalize gas companies on crossing a benchmark, which is not suited for our country? For every 1% increase in UFG, OGRA penalizes gas utilities with a heavy amount of over billion rupees, which goes to exchequer’s kitty, depriving gas companies of their hard earned profit and raising question marks on their existence.
Since these regulatory bodies work under the aegis of Federal Government, therefore the people at the helm of affairs need to review such stubborn decisions, which not only affect the performance of the organizations but also make their survival, uncertain. Regulators are established to maintain equilibrium amongst the relevant stakeholders of which shareholders of listed companies are an integral part.
Due to vacation of stay orders (in effect for last 3-4 years) from honourable courts of law that were filed by the gas utilities for a revised benchmark of 7%, the profitability of these companies has once again come under a severe threat as setting this benchmark on 4.5% would mean heavy taxing of profits in billions of rupees which might lead to financial collapse of these state owned institutions that are serving almost the entire population of the country. There can be one other PIA or Steel Mill in offing and that could also bring on stake the employment of thousands of executives and workers deployed in these gas utilities
If the government is really concerned on saving gas utilities from this impending disaster then it has to take concrete actions accordingly. It needs to review its list of sectors for gas supply priorities as the present strategy to convert from bulk to retail has caused heavy damages in terms of UFG as there is no UFG in bulk sales.
It also needs to advise its regulator to review the benchmark in light of prevailing situations and taking into considerations the above-discussed facts, especially on theft of gas where utilities are helpless due to the external factors. Government also needs to beef up the legislations for gas theft by ensuring the implementation of law in letter and spirit and by taking the culprits to task through imprisonment and imposition of heavy fines. It should be ensured that there are no easy escape routes for these gas thieves who are denting country’s economy to a significant effect.
The Sui companies have to however do more than present efforts to combat this peril of UFG. They need to review their strategies time to time in the developing scenario of UFG trends and come hard on gas thieves. They also need to check and device effective control on their workers who can possibly be involved in the connivance of the culprits.
On the other hand, as the citizens of this country it is imperative on us to play our due role not only in the judicious use of natural gas as it is fast diminishing but in checking and duly reporting for gas leakages and thefts, if we come across one.
If the government is considerate of its people by highly subsidizing the tariff of natural gas for use in households and for putting domestic sector on the top most priority of gas supply then it is equally important for the customers to reciprocate by playing their due role in national development.
If natural gas is considered as a natural treasure then the two utilities that are transporting this treasure to all nook and corners of Pakistan are the harbingers, striving hard to contribute in the country’s economy. They certainly deserve and need support from all government institutions as well as from business community and from public at large on their justified expectations in pursuit of their mission to stabilize the lifeline of the country. All stakeholders need to be on one page in understanding that the profitable existence of these two gas utilities is mandatory for the nation and its economy.

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