SSGC responds to JJVL’s LPG agreement

News Desk

SSGC has reiterated that it did not ‘discontinue’ the agreement with JJVL, adding that the last extraction contract between SSGC and JJVL was an interim mutual arrangement of 18 months following a Supreme Court of Pakistan (SCP) Order of 2018.

This is with reference to a news item that appeared in NewzTodays.  SSGC would like to present the facts and clarify its position as under:

At the onset, SSGC reiterates once again that it did not ‘discontinue’ the agreement with JJVL.  It must be clarified once again for public consumption that the last extraction contract between SSGC and JJVL was an interim mutual arrangement of 18 months following a Supreme Court of Pakistan (SCP) Order of 2018.  JJVL wrongfully asserted that SSGC opted not to extend the LPG agreement for ‘ulterior motives’; the assertion itself tantamount to the ‘ulterior motives’ of JJVL, misleading the stakeholders.

For the sake of record and clarity, SSGC never made any commitment to SCP for an alternate arrangement rather r, SCP in its Order dated 13-06-2018, ordered that termination of MOUs with JJVL is valid and SSGC was well within its legal and contractual right to do so without any adverse consequence. Recently, SSGC used the services of an international Consultant in order to conduct studies on the way forward. Summarily, the Consultant advised SSGC that the current gas stream at ILBP is a lean and pipeline quality gas, which means it will not create any adverse effects on pipeline and its allied installations if injected directly into the system without any pre-treatment. In this scenario, there would be no problem in injecting the gas directly into the Transmission pipeline network without any extraction of LPG/ NGL.

Interim arrangements are always for an interim period and are not for a protracted period of time. SSGC can only and which it does, whenever the need arises, procure goods and services in compliance with PPRA rules considering all legal, technical, and commercial considerations of doing so.

JJVL alleges in several places in its rebuttal that ‘SSGC is suggesting import and smuggling of LPG from Iran’.  This again is an allegation that is aimed at damaging the clean reputation SSGC enjoys among its stakeholders.  It is unthinkable for a responsible public limited company to propose ‘illegal smuggling of petroleum products’ or import of LPG despite economic sanctions, as JJVL envisages about SSGC in its response.

Despite JJVL’s assertion, SSGC nonetheless maintains that 76% of the JJVL’s LPG production caters to commercial and industrial customers which can be proven by the data. Hence it is a misconception to suggest that LPG is a poor man’s fuel. As stressed before, the emerging gap will be filled by making natural gas of 8 to 10 mmcfd available to gas customers. Indigenous gas, on the other hand, is much cheaper than very expensive LPG which is valuing Rs. 2,400 per MMBtu. Just for comparison purposes, 8 to 10 mmcfd volume can feed a population of 400,000 households equivalent to Sukkur City.

JJVL response enquires about the quantity of LPG stock available at Port Qasim.  SSGC had enough reasons to infer that since there is a sufficient volume of LPG stock available at Port Qasim, there will not be any LPG shortage in the coming days.  However, what the Company is genuinely apprehensive about is a greater likelihood of some market players (read: opportunists) who may cause an artificial shortage and push LPG prices up.

However, with an already sufficient supply available in the market, this artificial price hike too will not be sustainable and will soon correct itself. We believe that OGRA being the regulator is also cognizant of these rumors and is inclined to take legal action against those who are deliberately spreading false information.

SSGC strongly believes that the general public must not be led into wrongful and misleading assertions and must instead be apprised of facts as clearly spelled out in this rebuttal.