By SKM
December 28, 2024
ISLAMABAD: The Executive Committee (EC) of Special Investment Facilitation Council (SIFC) has set a deadline of January 15, 2025 Sui Southern Gas Company Limited (SSGC) and Jamshoro Joint Venture Limited (JJVL) to sign the revenue sharing based contract to make JJVL LPG-NGL extraction plant operational.
This decision was taken by the SIFC’s EC meeting on December 11, 2024. It was observed that the country is suffering an annual loss of $108 million since the JV LPG-NGL extraction plant is non-operational since June 2020. The total foreign exchange loss in the last four years until June 2024 amounted to $432 million, senior officials of the SIFC Secretariat and Petroleum Division told the Exclusivewaves.
The JJVL top management when contacted said the plant will take 45-60 days to resume production of LPG and NGL. As per the decision taken by SIFC EC, top sources said, the resumption of JJVL Plant in line with the Revenue Sharing Formula (may be used as a benchmark) has already been endorsed by the Supreme Court of Pakistan. The Federal Investigation Agency has also been asked to conclude the JJVL inquiry. The progress report will be shared by January 31st, 2025. Pending undisputed dues payable to SSGC by JJVL will be cleared before the resumption of gas supply to the plant.” The sources said the agreement and its compliance would be presented to the SIFC Secretariat, which would subsequently place it before EC-SIFC for information and endorsement. The progress by the Petroleum Division will be reported to SIFC by January 20, 2025.
The Sustainable Development Policy Institute (SDPI) has earlier submitted its study to the Petroleum Division suggesting Jamshoro Joint Venture Limited (JJVL) LPG-NGL extraction plant should be made operational at the earliest.
In its report “Indigenous LPG production: Challenges and Way Forward”, SDPI, the country’s well-known think tank, argued if Sui Southern-JJVL deal is done to operate extraction plant, it could reduce LPG imports by about 9 percent.
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 $108 million at the cost of foreign exchange reserves mainly based on loans from friendly countries. By starting JJVL, annual savings 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,” the study says.
It explains the JJVL plant has the capacity to produce 91,250MT of LPG annually. If the previous 15 years’ partnership is any guide, potential revenue from LPG sales, after accounting for the cost of replacing gas shrinkage, is estimated at around Rs2 billion per year for SSGC. Net revenue for SSGCL during this partnership is projected at Rs30 billion. Ends
