SSGC board approves reopening of JJVL LPG Plant

The board of directors of Sui Southern Gas Company Limited (SSGC) on Thursday approved the immediate reopening of the Jamshoro Joint Venture Limited (JJVL) LPG-NGL extraction plant.

The plant, which had been closed since June 2020, will resume operations under a newly agreed-upon revenue-sharing formula between SSGC and JJVL.

Fasih Ahmed, Director JJVL, said SSGC will receive 66% of revenues from JJVL, an increase from the previous figure of 57.54%.

Additionally, SSGC will procure 25% of LPG production at the OGRA-notified monthly price. These terms, agreed upon through extensive good-faith discussions, are even more economically favorable to SSGC.

He said this agreement reflects a pragmatic approach to maximizing national energy resources and ensuring economic sustainability for both parties.

From 2005 to 2020, SSGC earned PKR 31 billion ($110 million) from JJVL without making any investment.

Additionally, JJVL provided PKR 55 billion in gas payments to SSGC and PKR 20 billion in taxes.

During this 15-year period, JJVL delivered a benefit of $1.1 billion from LPG import substitution and $261 million from export earnings to the national economy.

The revenue-sharing model incentivizes SSGC to provide maximum gas to JJVL for processing and motivates JJVL to ensure the highest recovery rates to optimize production.

The reactivation of JJVL will lower consumer prices by increasing domestic supply, reduce reliance on expensive LPG imports, ease pressure on the current account deficit, and encourage a competitive market that benefits households.

Ahmed said JJVL was shut down on June 20, 2020, due to an unfavorable environment, despite the obvious and established economic benefits to SSGC.

The shutdown cost the country $108 million annually in losses. JJVL’s state-of-the-art facility, which has a replacement value of $250 million, will require 45-60 days to resume production.

SIFC has played a pivotal role in removing bureaucratic hurdles and creating a business-friendly environment. Investor confidence has markedly improved under the current government, as reflected in positive economic data. These developments strongly signal to foreign and local investors that Pakistan is once again open for business.