Sui southern gas company (SSGC) has asked guarantees from the federal government for bank loans of billions of rupees required in order to install 30 liquefied petroleum gas (LPG) air mix plants in faraway areas of Sindh and Baluchistan.

The Economic Coordination Committee (ECC) of the cabinet has given its approval for the installation of  60 mix-air plants by two public gas utilities  in remote areas and regions of the country, in a meeting conducted on 31st October 2016.

SSGC has been assigned with a task to set up half of the 60 mix air plants in two provinces where the company has gas transmission network- Sindh and Baluchistan.

Two of these plants will be installed in remote areas of Umerkot and Mithi in Sindh whereas the remaining will be installed in Baluchistan.

After the ECC’s decision, SSGC was tasked with installation of all plants immediately.

While talking to the media, a SSGC official told that the feasibility study of the air plants was already completed and the preparation for inviting expression of the interest for the front-end-engineering (FEED) study was in progress.

The official also revealed that Ministry of Petroleum and Natural Resources had laid stress on providing funds to SSGC as it initiated the second liquefied natural gas pipeline project with loans from commercial banks.

Therefore, SSGC requested financing on soft terms with sovereign guarantees. The petroleum ministry asked the ministry of finance to provide soft-term Rs. 10 billion commercial loans from the financial markets at a competitive interest rate for a period of 10 years with sovereign guarantees.

Approximately Rs. 14 billion will be required in accordance with the estimated cost of mix air plants and their networks for installation of plants.

According to the existing balance sheet capacity, SSGC was able to meet the requirement Rs. 18 billion of the total financing of the LNG pipeline and Rs. 40 billion has been managed with the assistance of the  sovereign guarantees of the federal government.

As the project is coming to an end, the government has intentions of initiating the third pipeline project  as well as helping in installation of 30 mix air plants at the cost of Rs. 80 billion.

Currently, Pakistan is facing acute shortage of natural gas with respect to both general consumption and electricity generation. Four billion of cubic gas per day(bcfd) is produced whereas the consumption rate is 6 bcfd which leaves a shortfall of 2 bcfd.

The demand is rising as the shortfall hits the economic growth of the country. The government is making progress with the plans of installation of LPG air mix plants in remote areas where the supply of the piped gas is not economically feasible.

For the very first time in the history of the country, government has started importing LNG to the  

(CNG) filling stations, power producers, fertilizer plants and industrial consumers.

Currently 600 cubic feet of LNG is imported every day which also adds to bridging the shortfall.