Scenario 11 — Pipeline Material (Natural Gas Continuous Flow)
📊 Business Case — When & Why You Use This
Pipeline procurement covers materials that are continuously available through a physical connection — natural gas, electricity, water — where there's no discrete delivery to receive. You don't raise a PO and you don't post a goods receipt; you simply record what you consumed (from a meter reading) and settle with the supplier periodically. It's the natural model for utilities feeding a plant around the clock.
🕐 When to use it
For utilities that flow without individual deliveries — natural gas from SSGC, electricity from K-Electric, water from KWSB. Anything metered and consumed continuously rather than received in batches.
❓ Why it matters
It removes pointless paperwork: no PO, no GR for something that never arrives as a "shipment." Expense is booked from the meter reading at consumption, and the supplier is paid through periodic MRKO settlement.
👤 Who triggers it
Purchasing sets up the pipeline info record (vendor + price); plant staff record the monthly meter reading as a consumption posting; accounts payable run MRKO to generate the invoice.
🔁 The key distinction
Continuously available, never stocked. Unlike consignment (which holds physical vendor stock), pipeline material has no PO and no GR and no stock to track — you only ever post consumption (mvt 201 with special stock P), settled periodically.
💰 Financial Impact — The Easy-Money Example
SSGC pipes natural gas to PakSteel Karachi all month. At month-end the meter reads 50,000 m³ at ₨50/m³. There's no receipt event — the money story is simply: read the meter, book the expense, settle:
The big idea: there's no goods receipt to post and no inventory to value — the expense is recognized at the moment of consumption (the meter reading), against a pipeline liability, and that liability is converted to a payable only at the periodic MRKO run.
🇵🇰 The Business Story
🎯 What you'll learn
- Special Stock P — "pipeline" — no physical stock tracked
- Material type often UNBW (non-valuated) with Procurement Type "Pipeline"
- No PO needed — info record alone defines vendor + price
- Direct consumption via mvt 201 with Special Stock
P - MRKO settles consumption into invoice
UTIL-GAS-01 (UNBW, non-valuated — quantity only) — create steps. First time? the why behind every field.
P (pipeline) — or MIGO → Action Goods Issue · Reference Other. Full guide: MIGO Selection Bar.
🔧 Step-by-Step
📦 Master Data
11.1 — Pipeline-enabled Material + Pipeline Info Record
- MM01 · Material UTIL-GAS-01 · Type UNBW (or ROH with Procurement Indicator P)
- Purchasing view: Set Procurement Type indicator if needed
- ME11 · Vendor VEN-SSGC · Material UTIL-GAS-01 · Info Category: Pipeline
- Price: PKR 50/m³
- Save
🔄 Transaction Flow (no PO!)
11.2 — Record consumption · MB1A mvt 201 Special Stock P
- MB1A · Mvt 201 · Special Stock
P - Material UTIL-GAS-01 · Qty 50,000 m³ (this month's reading) · Cost Center PKKHI-PROD
- Vendor: VEN-SSGC · Post
Posting: Consumption Dr / Pipeline Liability Cr.
11.3 — Monthly Settlement · MRKO
Same as consignment — MRKO converts pipeline liability to vendor invoice for payment.
✅ Verification — Confirm Scenario 11 Worked
- MB51 → filter Material UTIL-GAS-01 → see the mvt 201 (Special Stock P) consumption line
- FBL3N → Consumption G/L debited and the Pipeline Liability G/L credited for the same amount
- After MRKO → MIRO/MRKO settlement doc moves the pipeline liability into normal AP for VEN-SSGC
🎓 Interview-Ready Answers
Q: How does pipeline procurement differ from consignment?
Both defer the payable to a periodic MRKO settlement, but consignment involves physical vendor stock staged at your site (special stock K) that you receive (mvt 101) and later consume. Pipeline material (special stock P) is continuously available through a connection — gas, electricity, water — with no PO and no goods receipt and no stock tracked at all; you only ever post consumption.
Q: Why is there no PO or goods receipt for pipeline material?
Because the material isn't delivered as discrete shipments — it flows continuously. There's nothing to "receive." The pipeline info record alone defines the vendor and the price, and consumption is recorded directly (mvt 201 with special stock P), typically from a meter reading.
Q: When is the expense recognized and how is the vendor paid?
The expense is booked at consumption — the consumption posting debits a consumption account and credits a pipeline liability. The vendor is paid via periodic MRKO settlement, which converts the accumulated pipeline liability into a normal vendor invoice, then paid through F-53/F110.