The privatisation of gas utilities is moving ahead with the selection of a consultant to study a gas pricing policy and the start of negotiations for the contract to manage the first asset sell-off. Tenders inviting international gas companies to bid for a minority stake and the management of Sui Southern Gas Company (SSGC), one of two public gas distributors, are to be issued later this year.

The UK’s Arthur Andersen & Company is to recommend a gas pricing formula as part of a three-month consultancy contract starting at the end of May. ‘The price will not be market-linked, because the gas companies will still act as monopolies. There will be some linkage with alternative fuel prices,’ a SSGC source says. Gas pricing will be crucial for the government’s ability to attract buyers for the utilities, analysts say.

SSGC is holding final negotiations with Bear Sterns & Company for a consultancy contract to arrange its sale to the private sector. The work will include inviting international gas companies to bid for a 26 per cent stake in SSGC and taking over management. Bear Sterns submitted the lowest offer for the job in competition with the US’ Merrill Lynch and Morgan Grenfell of the UK (MEED 22:4:94). The government’s shareholding, now just over 90 per cent in total, is to be reduced to 40 per cent this year.