SSGC Board Approves Resumption of JJVL Operations
By Salman Khan:
JJVL is going to resume production of LPG as the board of directors of SSGC has approved a deal following directions of the SIFC.
Supreme Court of Pakistan (SCP) had approved an interim revenue sharing of 57% for SSGC and 43% for JJVL and approached A.F. Ferguson & Co. to determine a final revenue-sharing framework subject to the court’s approval. AFFCO determined revenue sharing of 57.54% in favor of SSGC. No product sharing between SSGC and JJVL was provided for in the SCP-approved agreement.
The non-agreement between both parties has left the matter inconclusive.
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A Working Group (WG) meeting was held on 21 January 2025 to reach an arrangement. However, WG noted that a gap still existed between SSGC’s proposed revenue sharing ratio of 78:22 and JJVL’s offer of 64:36, both allocating 25% LPG to SSGC.
SSGC, however, viewed that with the Captive and Industrial Blend, it could be further adjusted to 70:30, and in case of disconnection of gas to CPPs, this ratio would become 56:44.
WG determined that consensus could be achieved on revenue sharing at a 66:34 ratio (SSGC: JJVL), with a 25% LPG share for SSGC based on the OGRA-notified producer price. The following was decided:
EC concurred with the decisions of the WG meeting held on 21 January 2025 and directed the following:
a) The JJVL plant must be made operational without any further delay, given the national objective of maximizing domestic LPG production.
b) An agreement should be reached over revenue sharing at a 66:34 ratio (SSGC: JJVL), with a 25% LPG share for SSGC based on the OGRA-notified producer price. This ratio is well above the ad-hoc/provisional revenue share of 57:43 (SSGC: JJVL) endorsed by SCP. The revenue sharing of 66:34 (SSGC: JJVL) is based on the actual sales value to SSGC, considering the actual sales mix of fertilizer (31%), process (27%), and captive power units (42%) connected to SMSs, i.e., FJFC and FFBQL (“Sales Mix”).
c) Additionally, in the event of price revisions by OGRA or changes in the sales mix/consumer categories by the Federal Government, the revenue sharing ratios between the parties will be reviewed and revised accordingly.
d) Pending undisputed dues payable to SSGC by JJVL must be cleared before the resumption of gas supply to the plant.
e) The FIA inquiry should be concluded on merit at the earliest. The Minister of Petroleum/Ministry of Energy – Petroleum Division must be kept on board.
SSGC must place the directions from EC/arrangement before its BOD for approval, no later than 25 February 2025. The Petroleum Division must ensure compliance.
