The company has achieved the distinction of doubling its network capacity


Nov 03 - 09, 2003



The shareholders of Sui Southern Gas Company (SSGC) have approved 18 percent cash dividend for the year ended June 30, 2003 in the 49th Annual General Meeting held here at Karachi on October 24, 2003. Mr. Aitzaz Shahbaz, Chairman, Sui Southern Gas Company presided over the said meeting. The shareholders unanimously approved the payment of Rs. 1.80 per share of Rs. 10/- each for the year under review and appointed M/s Taseer Hadi Khalid and Company, Chartered Accountants as the auditors for the financial year 2003-2004.

The Chairman said that positive developments powered the national economy at a healthy rate of 5.1 percent GDP growth in financial year 2002-03. The Company played a key role in fueling national growth by meeting its gas supply commitments from April, 2003 onwards to KESC and WAPDA power plants. We also provided natural gas for captive power generation for industrial operations to a large number of export-oriented industries, particularly in the textile sector, enabling them to maintain low energy input costs resulting in reduction in cost of industrial production.

He said that SSGC has achieved the distinction of doubling its network capacity from 600 mmcfd in year 2000 to 1200 mmcfd in July 2003. The Company is able to transport 960 mmcfd gas from the main existing fields of Sui, Badin, Miano, Kadanwari and the added new fields of Sawan, Zamzama and Bhit to its network. An additional volume of 240 mmcfd was transported through its network and was provided to SNGPL. Giving details of network during the year under review, he further informed that gas transmission network of the company increased by 62 km, composed of 40 km of Bhit-Bajara pipeline and 22 km of Khadeji-FJFC interlink. In addition 526 km distribution mains and services were laid and 110 km of rehabilitation work was carried out in a phased program of replacing old corroded pipeline. As part of the Gas Infrastructure Rehabilitation and Expansion Project (Phase-1), compressors from Sui field were relocated at Hyderabad and system was upgraded to receive gas from new field of Bhit and Sawan. IRBP was augmented to enable reverse gas flows of 160-180 mmcfd from Zamzama gas field into the Sui Northern's system. The three field are now fully integrated into the pipeline network raising your company' transmission capacity near the year end to 1200 mmcfd.

The Chairman said that the natural gas sector in Pakistan gained special prominence as it surpassed the oil sector by achieving 43 percent share vs 41 percent for oil in the country's total energy mix in tons of oil equivalent (TOE). Realizing the increasing demand for gas, the company has recognized the immense business growth opportunities and has developed a five year business plan to derive full benefits for its shareholders through expansion in transmission and distribution capacities, increased sales, revenues and profits. Giving details of five years plan, the Chairman said that expansion of transmission and distribution network for enhancement of gas supply to power plants, industrial and commercial sectors, customer satisfaction, Business process re-engineering (BPR), and implementation of ERP to provide effective MIS for business operations, Enterprise Information System (EIS) in all areas of business to make SSGC a "Most IT-enabled company", Human Resource Development and community support service are the main features of our plan.



The Chairman also informed the shareholders that OGRA has issued a 30 year licence upto 2032 which gives exclusive right to sell and distribute gas to existing customers upto June 30, 2010 and such customers which are connected to its distribution system upto June 30, 2005. The licence also contains certain obligations on the part of the licence and prescribes minimum performance standards and dispute resolution procedure to ensure quality service to its customers. The company is moving rapidly to ensure compliance to the licence requirements.

The Chairman further said that the gas sales registered an increase of 8 percent in volume and 12 percent in value, rising to 254,349 MMCF, valuing Rs. 36.2 billion, net of sales tax. The highest increase in volume was registered in power sector at 13 percent and other industries at 12 percent. KESC now stands out as a major customer and accounts for almost 25 percent of the company sales. With the new increase, supply level at 300 + mmcfd to KESC (committed 238 mmcfd) and 120 mmcfd to WAPDA/Jamshoro (committed 63 mmcfd). The two utilities will be saving about Rs. 10 billion and Rs. 4 billion, respectively.

The Chairman said that the customer base increased from 1.612 million to 1.669 million. The new connections to industrial/commercial and domestic customers stood at 1,093 and 55,696 annually.

Meter Manufacturing Plant has obtained ISO 9001:2000 certification during the year by carefully streamlining and documenting its procedures, as stated by the Chairman. The plant produced 303,750 gas meters during the year for self consumption and sale to SNGPL and plant posted a profit of Rs. 70 million being 69 percent higher compared to profit of Rs. 42 million earned in the previous year.

The Chairman informed that company's profitability continues to be determined by OGRA, the Regulator so as to earn return before tax of 17 percent on net average operating fixed assets excluding financial and other charges. Some heads of "other income" are also on company's account outside the purview of the price formula. While there was a minor addition in the net operating assets during the year, the financial expenses charged to profit and loss amount registered an increase and has registered in decline in profit before tax which stands at Rs. 2,049 million compared to Rs. 2,154 million in the previous year. However, the net income tax incidence is lower due to write back of provision of tax liabilities which is no more required. The profit after tax therefore stands at Rs. 1,448 million compared to Rs. 1,435 million as compared to Rs. 2.14 in the last year.

The Chairman informed the shareholders that the Company has initiated a number of such social service projects, particularly in the fields of environmental protection and education. The Company is helping WWF in its endeavors to preserve mangrove forests in the coastal areas of Karachi. Gas pipeline has also been extended to these areas to provide alternate fuel to the villages at Sandspit and Hawksbay to prevent cutting of mangroves for firewood. With a similar objective of preserving juniper forests in Balochistan gas supply pipeline is being extended to Ziarat on a fast track basis, and a special programme is being implemented to provide gas stoves and LPG at subsidized rates to the households in the interim period to prevent cutting of juniper trees, for use as firewood. Recently, the company employees while contributing a hefty sum of Rs. 4 million to the Prime Minister Rain Effectees Fund and also helped in draining water from the flooded streets in Karachi. Relief goods worth Rs. 1 million were also distributed to the flood effectees in remote areas.