By SKM
March 06, 2025
ISLAMABAD: In a major development, the board of directors of Sui Southern Gas Company Limited (SSGC) that met on Thursday accorded approval in making the Jamshoro Joint Venture Limited (JJVL) LPG-NGL extraction plant operational with immediate effect as per the terms finalized by the Special Investment Facilitation Council (SIFC).”
“Yes, the SSGC board has approved the restart of the JJVL LPG plant after 4 years and 8 months which was closed down in June 2020. The plant will now be operational based on the revenue sharing formula agreed between the gas utility and JJVL in the planform of the SIFC. The agreement reached between JJVL and SSGC under the supervision of SIFC is based on revenue sharing at 66:34 ratio (SSGC: JJVL) with 25% LPG share for SSGC based on the OGRA notified producer price. This will ensure Rs2 billion per annum to Sui Southern,” a top official who was part of board meeting told Exclusivewaves.com.pk.
Managing Director of Sui Southern Amin Rajput when contacted confirmed the development saying: “Yes, board of the company has approved to make the JJVL plant operational.”
As per the decision of SIFC’s executive Committee meeting held on January 22, 2025, the Board of Sui Southern met on Thursday and approved the revenue sharing formula giving a go-ahead to restart the JJVL LPG plant.
Earlier in January 2024, the Special Investment Facilitation Council (SIFC) took the notice of closure of the Jamshoro Joint Venture Limited (JJVL) LPG-NGL extraction plant from June 2020 and directed the Petroleum Division to help resolve the disputes between the plant management and Sui Southern authorities. SIFC wanted to use the plant as an import substitution industry against LPG import and save the precious foreign reserves being used for the import of liquid gas.
Since June 2020, till the SIFC took notice of the JJVL plant’s closure in January 2024, the country braved the domestic LPG production loss of over 317,000 tonnes with domestic Natural Gas Liquid production loss of over 127,000 tonnes and more importantly, the government has to face the additional burden of over $193 million because of import of LPG to substitute for JJVL LPG production.
In addition, the official said, the country also faced a loss of export earnings from NGL amounting to over $86 million and this is how the total system loss from the shutdown of JJVL to the economy stayed over Rs94 billion.
However, the Executive Committee of SIFC which met on January 22, 2025 decided that JJVL LPG-NGL extraction plant must be made operational without any further delay, given the national objective of maximizing domestic production of LPG..
After getting the nod from parties to the dispute, SIFC had asked for an agreement based on revenue sharing at 66:34 ratio (SSGC: JJVL) with 25% LPG share for SSGC based on the OGRA notified producer price. This will ensure Rs2 billion per annum to Sui Southern. The LPG plants would be functional after the lapse of 4 years and 8 months.
“This ratio has been worked out as being well above the ad-hoc / provisional revenue share of 57:43 (SSGC: JJVL) endorsed by the Supreme Court of Pakistan. Revenue sharing of 66:34 (SSGC:JJVL) is based on the actual sales value to SSGC considering actual sales-mix of fertilizer (31%), process (27%) and captive power units (42%) connected to SMSs i.e., FJFC and FFBQL, “Sales Mix.”
Additionally, in the event of price revisions by OGRA or changes in Sales-Mix / consumer categories by the Federal Government, the revenue sharing ratios between the parties will be reviewed and revised accordingly.
It was also decided in the SIFC meeting that the pending undisputed dues, payable to SSGC by JJVL, will be cleared before resumption of gas supply to the Plant. More importantly the FIA inquiry will be concluded on merit, at the earliest and to this effect, the Minister of Petroleum or Petroleum Division will be kept on board.
Earlier, on the direction of SIFC, the Sustainable Development Policy Institute (SDPI) submitted its study to the Petroleum Division suggesting Jamshoro Joint Venture Limited (JJVL) LPG-NGL extraction plant should be made operational.
SDPI argued if Sui Southern-JJVL deal is done to operate the extraction plant, it could reduce LPG imports by about 9 percent, saving $73 million annually. The plant is non-operational since June 2020.
In the meeting of Implementation Committee of SIFC on September 6, it was announced that a decision will be taken on the issue as per findings and recommendations of SDPI. The study is now lying with DG LGs in Petroleum Division.
The study shows Sui Southern Gas Company Limited (SSGC) is still estimated to earn revenue of Rs2 billion per annum if JJVL LPG extraction plant is made operational. Annual LPG import by SSGC is 170,137 metric tons worth $107 million at the cost of foreign exchange reserves mainly based on loans from friendly countries. By starting JJVL, annual saving will be $57 million. “SSGCL can reduce its vulnerability to global market fluctuations and geopolitical risks associated with importing energy resources by producing a significant portion of its LPG domestically.” Ends
