KPMG Expects to Resolve Gas Debt in 3 Months
A consultant firm hired by Oil and Gas Regulatory Authority (Ogra) KPMG has offered a plan to resolve circular debt in gas sector within three months.
At present, the gas sector is facing Rs 2.6 trillion circular debt which is choking entire energy chain. LNG has also been a factor in building up the circular debt as SNGPL had to pay multi-billion rupees on account of LNG supply by PSO.
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Regarding gas circular debt, management stated that KPMG has completed its workings and submitted its report. As per management view, the key issue is the lack of clarity regarding the source of cash inflows while they expect gas circular debt to resolve in 3 months,” SSGC management said in a briefing on Friday.
The low recovery of bills by SSGC has also been on factor that contributed to piling up circular debt. SSGC has been able to reduce losses during recent period. Balochistan province has been adding losses which resulted in piling up debt.
Sui Southern Gas Company (SSGC) conducted its analyst briefing on Friday, where management discussed financial performance and future outlook.
Regarding gas circular debt, management stated that KPMG has completed its workings and submitted its report. As per management view, the key issue is the lack of clarity regarding the source of cash inflows while they expect gas circular debt to resolve in 3 months.
Management plans to add 50,000 RLNG connections starting from FY26. They highlighted that RLNG is around 30% cheaper than LPG.
The company has received 12,000 applications, while 6,000 connections for multistory buildings are currently underway.
Management also mentioned that RLNG is sold to industrial customers under a blended mix of natural gas and RLNG, with the blending ratio varying during the winter months.
OGRA has determined UFG for SSGC at 12.07% (34.80 BCF) for FY25. However, the company is contesting this determination with OGRA and believes it has strong grounds to reduce the UFG to 10% (29 BCF). To highlight, every 1 BCF reduction in UFG results in Rs1bn in savings.
The company noted that its quarterly earnings are usually higher in the September quarter, as UFG increases during winter due to harsh
