KARACHI: Moratorium on new connections of industrial, commercial and domestic housing schemes including high-rise buildings by government has resulted in abrupt increase in Unaccounted-for-Gas (UFG) volume.
For instance, Sui Southern Gas Company (SSGC)’s UFG volume swelled from 38 billion cubic feet (bcf) to 66 bcf in the last five years due to rising cases of gas theft, done through direct clamping on supply mains.
UFG is the difference between the volume of gas purchased and sold. In other words, UFG is the inevitable imbalance that exists at any given time between the measured gas coming into a utility’s distribution system and the measured gas going out of the same system. This difference is treated as Unaccounted-for-Gas by the regulator Oil and Gas Regulatory Authority (OGRA) in this case – which builds a form of reimbursement for this gas into the utility’s tariff structure.
For many years, both SSGC and SNGPL have been plagued by a major menace of line losses, which in the natural gas industry parlance is labeled as UFG. The biggest challenge which companies are being faced is UFG. For all intents and purposes, UFG is a serious issue since every 1% increase in UFG takes away around Rs 1 billion from the gas companies’ profits as a penalty. Gas companies cannot sit over it since the Regulator is watching and watching very intently, wasting no time in penalizing these utilities when they exceed the stipulated benchmark.
While there is no doubt that there is heavy price to be paid for increasing UFG volumes, and the factors that have contributed to rising trend are mainly gas theft, which constitute, according to industry estimates, more than 50% of UFG.
Another contributing factor is the problem of leakages, which make up for around 34% of the UFG pie. Leakages have increased due to an ageing pipeline network, dating back to more than 40 years, diversion of resources that could have been used for rehabilitation to new town gasification as per government directives, third party damages and illegal tapping on the utilities’ distribution network.
In addition, due to mushroom growth of domestic sector, the already existing pipeline network has become under capacity requiring high operating pressures to be maintained, that resulted in higher leakage volumes. Moreover, law and order situation especially in Sindh and Balochistan and in places like Karak in Khyber Pakhtunkhwa, emergence of no-go areas, inability to pay higher bills in winters and increasing cases of meter tampering have also resulted in increasing UFG volumes.
Most of the factors that have contributed to rising UFG levels are beyond the Company’s control. They include illegal connections, gas distribution in economically unfeasible and unmanned areas in Balochistan and KPK, third party damages to pipelines due to non-existence of utility corridor and shift of sale from bulk to retail customers as per the Government policy. On the other hand, dilapidated network, corrosion and weak Cathodic Protection, all of which contribute to underground and overhead leakages, are difficult yet controllable factors.
Since the last five years, while they battled rising UFG and severe OGRA-imposed benchmarks as a consequence, gas utilities have been taking a number of measures to reduce UFG. These steps include identifying and rectifying underground and overhead leakages as well as measurement errors and conducting regular gas theft raids with the aid of local police and magistrates. There is also legislation in place to clamp down on theft miscreants, although its outcome has not been very positive. Having said that, the gas utililities still need to do a lot in these areas to arrest the rising UFG trend, through proper monitoring and surveillance as well as by improving the quality of workmanship.
More significantly, since the last several years, for better visibility and understanding of distribution network, the gas companies have created small segments or zones inside the cities to effectively manage, monitor and control the segmented network.
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