ISLAMABAD (October 11 2006): In an 'information memorandum' (IM), the Privatisation Commission has informed the potential bidders that Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) will be offered for bidding as a whole in bundled form. However, transmission (T) and distribution & sale (D&S) business of both companies will be commuted separately.

The separation of transmission and distribution & sale (D&S) will help the management run the affairs of the gas utilities in a prudent manner and help it have checks and balances in their day-to-day operations.

The 'Memorandum' is an official document made available to potential investors by the Privatisation Commission for providing them basic information about the entity offered for sale. Then comes the next phase of 'due diligence'. For due diligence, the Privatisation Commission opens a data room to facilitate the investors to get quick response for their queries.

Sources said that SSGC and SNGPL sell-off plan is being pushed forward on priority basis and, on direction of the Oil and Gas Regulatory Authority (Ogra), both companies are undergoing restructuring.

Officials believe that restructuring will make the gas utilities more attractive for investors. The Privatisation Commission had offered SSGC and SNGPL for privatisation some time back and got massive response from investors. Sources said that as part of the restructuring plan and separation of accounts, the gas sector needed to be restructured before implementation of TPA regime. They said that transmission and distribution/sale businesses of SNGPL and SSGC needed to be unbundled before offering them for divestment.

Transmission (T) and distribution/sale (D&S) are based on appropriate financial parameters and considering their specific characteristics for improving their utility and effectiveness.

They said TPA introduction has been clearly laid in the 'information memorandum' for potential investors. The IM was included as binding provision in the shares purchase agreement (SPA) for privatization of both utilities.

Sources said a detailed road map for restructuring of the gas sector and TPA introduction was provided to the short-listed parties. They said that SSGC and SNGPL have started separating 'T' and 'D&S' accounts and would be able to file separate tariff petitions for the two functions in 2007.

Copyright Business Recorder, 2006