SSGCL Contract for the Supply of Gas for Industrial Use

Introduction

At Josh and Mak International, we provide expert legal advice on various contractual agreements within the energy sector, including the supply of natural gas. This article details the contract for the supply of gas for industrial use by Sui Southern Gas Company Limited (SSGCL), elucidating the terms and conditions, obligations, and legal implications for industrial consumers.

Overview of the Contract

Parties to the Contract: The contract is made between SSGCL, a company incorporated under the Companies Ordinance 1984, with its registered office at SSGC House, Sir Shah Muhammad Suleman Road, Gulshan-e-Iqbal, Karachi, and the industrial consumer (referred to as “the Consumer”), whose full details are provided in the contract.

Purpose: The contract outlines the agreement for SSGCL to supply natural gas to the Consumer for industrial use at specified premises.

Key Components of the Contract:

1. Security Deposit:
   • The Consumer must pay a security deposit equivalent to three months’ estimated natural gas consumption, including meter rent and taxes. This deposit can be in cash, bank guarantee, or any other form approved by SSGCL. The deposit earns interest if in cash, which is adjustable against outstanding bills annually. The deposit amount may be increased if consumption rises or prices increase.
2. Price:
   • The Consumer pays for natural gas at rates notified by the Authority (OGRA). Prices are subject to change, and the Consumer must pay the minimum charges if consumption falls below the minimum level. The Company can adjust bills for any errors or omissions.
3. Meter Rent:
   • The Consumer pays rent for the gas meter as prescribed by SSGCL and approved by OGRA. This rent is subject to revision.
4. Other Charges:
   • The Consumer also pays taxes and charges levied by the government on natural gas. Charges for testing the houseline before commissioning the gas supply are also the Consumer’s responsibility.
5. Title and Ownership of Gas Meter and Appurtenances:
   • SSGCL retains ownership of the gas meter and associated fittings. The Consumer is responsible for the safety of these installations and liable for any damages.
6. Houseline Installation, Modification, and Alteration:
   • The Consumer must ensure that the internal piping (houseline) meets SSGCL’s standards. The Company has the right to inspect and test these installations.
7. Meter Installation:
   • The gas meter is installed at the property boundary or another location approved by SSGCL. The Consumer must provide adequate space and access for the meter.
8. Further Connections/Alterations:
   • SSGCL may provide further connections from the supply main and has the right to authorize or carry out alterations to the gas installations.
9. Meter Inspection:
   • SSGCL periodically inspects the gas meter, and the Consumer must allow access for such inspections.
10. Measurements and Meter Register:
    • Gas consumption is measured in cubic feet or cubic meters and billed based on British Thermal Units (BTUs). If a meter is found to be inaccurate, adjustments are made based on past consumption.
11. Billing:
    • Bills are issued periodically, typically every 30 to 45 days. The Consumer must pay within 15 days of issuance. Late payments incur interest charges. Errors in billing can be corrected, but disputes must be raised promptly.
12. Payment:
    • Payment is the Consumer’s responsibility and must be made in full by the due date. Failure to pay can result in disconnection of the gas supply.
13. Unauthorized Connection:
    • The Consumer is prohibited from obtaining or extending gas connections without authorization from SSGCL.
14. Company’s Right to Reduce/Interrupt/Curtail Supplies:
    • SSGCL may reduce or interrupt gas supply due to accidents, maintenance, or other unavoidable circumstances. The Company is not liable for losses due to such interruptions.
15. Indemnification:
    • The Consumer is responsible for any loss, damage, or injury resulting from the use of natural gas and must indemnify SSGCL against all claims.
16. Signing of Contract:
    • The contract must be signed by an authorized officer of SSGCL to be binding.
17. Contract Cancellation:
    • SSGCL can cancel the contract for various reasons, including legal actions against the Company, unauthorized use of gas by the Consumer, or violations of contract terms.
18. Tampering of Gas Installations:
    • Tampering with the gas meter or installations can result in severe penalties, including disconnection of gas supply and charges for unauthorized consumption.
19. Reconnection:
    • Reconnection after disconnection requires payment of reconnection charges and clearance of outstanding dues.
20. Dispute Resolution:
    • Disputes that cannot be amicably resolved are referred to OGRA for resolution.
21. Missing Natural Gas Supply Contract Form:
    • If the original contract form is missing, standard terms and conditions approved by OGRA at the time of gas supply commissioning will apply.
22. Required Enclosures:
    • Corporate consumers must provide a board resolution authorizing the signatory. Partnership firms must provide an attested copy of the partnership deed.
23. Contract Termination by Either Party:
    • Either party can terminate the contract with one month’s notice. All outstanding claims for gas supplied must be settled upon termination.
24. Undertaking:
    • The Consumer affirms that no previous gas connection at the premises was disconnected for non-payment of bills.

Legal and Operational Implications

Consumer Obligations: The Consumer is obligated to maintain the security deposit, ensure timely payment of bills, and comply with all safety and operational standards. Unauthorized connections or tampering with gas installations can lead to severe penalties, including disconnection and legal action.

SSGCL Rights and Responsibilities: SSGCL retains ownership of gas meters and related installations, ensuring their maintenance and safety. The Company has the right to adjust prices, inspect installations, and interrupt supply for maintenance or other reasons. SSGCL also holds the authority to cancel the contract for non-compliance or other violations by the Consumer.

Dispute Resolution: The contract provides a clear mechanism for resolving disputes through OGRA, ensuring that both parties have a formal recourse for addressing grievances.

Financial Implications: The financial terms, including security deposits, meter rent, and other charges, are clearly defined, ensuring transparency and predictability for the Consumer.

Conclusion

The SSGCL contract for the supply of gas for industrial use outlines comprehensive terms and conditions that govern the relationship between the Company and industrial consumers. At Josh and Mak International, we are committed to helping our clients understand and comply with these contractual obligations, ensuring smooth and efficient operations. For detailed advice and support, please contact our expert team.