Revamping and expanding its infrastructure to handle import of CNG

Apr 03 - 09, 2006

Sui Southern Gas Company (SSGC) is one of Pakistan's leading integrated gas distribution companies. Its franchised area is spread over Sindh and Balochistan. The Company's core business is distribution of gas in its franchised area. The operations include purchase of natural gas in bulk from exploration and production companies, transmit it to load centres through its high pressure transmission system and distribute it to the customers.

The transmission system of the company extends from Sui to Karachi, comprising of nearly 3000 Km of high pressure pipeline ranging from 12" to 24" in diameter. The distribution network is spread over 25,000 Km covering 120 towns and 930 villages in the two provinces. The company sold 337,638 million cubic feet (MMCF) of natural gas to about 1.8 million industrial, commercial and domestic consumers during year 2004-05.

The present company was formed in March 1989 following mergers of three pioneering companies, namely Sui Gas Transmission Company, Karachi Gas Company and Indus Gas Company. Sui Gas Transmission Company was formed in 1954 with the primary responsibility of gas purification at the Sui field in Balochistan and its transmission to the consumption centres at Karachi. Two distribution companies were established in 1955 and were responsible for the distribution of gas to consumers in Karachi and in other towns along the route of the transmission pipeline between Sui and Karachi. In 1985, these two distribution companies were merged to form Southern Gas Company and later, in 1989, Southern Gas Company and Sui Gas Transmission Company were merged to form the Sui Southern Gas Company.

The company has launched a strategic five-year business plan at an appropriate time while financing is available to the company at extremely attractive rates. The company enjoys inherent financial strength with a low debt equity ratio, which provides good leverage to finance expansion at lower interest rates. The SSGC has undertaken a number of new initiatives, which will significantly improve its productivity and revenue through improved corporate governance and implementation of technology-based solutions in various business areas. Through a gas price equalization agreement the company has been assured of an equitable cost of gas, which should facilitate adequate operating margins in the coming years.

The 11th International Middle East Gas Summit 2006 was held in Doha, Qatar in February this year. H.E. Abdullah Bin Hamad Al-Attiyah, Second Deputy Premier and Minister of Energy and Industry of Qatar inaugurated the conference. In his key note address, he stated that the steady increase in the price of oil in recent years, and growing uncertainty about prices and supply in future, will accelerate the pace of development in natural gas. Traditionally Japan and South Korea were major markets for LNG from Qatar, but the focus is now shifting towards regional markets. He stated that Qatar was looking at the requirement of neighboring states, as these were expected to provide sizable off-take on an economic basis.

At the conference SSGC also presented Pakistan's 25-Year National Energy Plan and apprised the audience about the country's robust gas distribution infrastructure. The delegates showed keen interest in SSGC's integrated LNG import project, which is envisioned to create additional capacity of around 3.5 mtpa, equivalent to 500 mmcfd of natural gas, in the first phase. The project requiring an estimated capital investment of US$ 500 Million, includes construction of an LNG storage and re-gasification terminal near Karachi, and is set for completion in 2009. In the second phase capacity of the project will be increase by another 3.5 mtpa equivalent to nearly 1,000 mmcfd of natural gas.

Key objectives of the strategic plan for the next five years

* Expansion of transmission network by 608 kms from 2,942 km in 2005 to 3,550 km by 2010, enhancing capacity from 1,300 mmcfd in 2005 to 1,700 mmcfd by 2010.

* Expansion of distribution network and supply mains by 5,236 km from 25,764 km in 2005 to 31,000 km by 2010 connecting 600 new towns and villages in Sindh and Balochistan.

* Enhancement of gas supply to power plants, industrial and commercial sectors including supply of gas to previously deprived areas in the domestic sector.

* Increase of the customer base from nearly 1.8 million to 2.2 million by adding 447,000 new customers to the company's system.

* Consistent appreciation in shareholder's value by increasing the company's asset base and significant improvement in productivity and efficiency.

* Focus on improved, friendly and efficient customer services under the vision "Service with a smile".

* Establishment of automated online customer facilitation centres.

* Multiple bill payment options and channels.

* Latest technology digital prepaid meters with improvement of call centres to include an online customer information system.

* Revamp the current business processes, to improve company efficiency and implement ERP, CIS, GIS and the best business policies for ISO 9000 certification.

* Increase surveillance and introduce an automated emergency response system (ERS) and SCADA for the security of company assets including the transmission and distribution networks.

* Improve the quality of human resource through career planning, training of employees and development of management.

* Implement environment management system, occupational health and safety system as required under Certification ISO 14001 and OHSAS 18001 standards.

* Set up Enterprise Information System (EIS) in all areas of business using state of the art technology to make SSGC the "Most IT Enabled Company".

* Human resource development and empowerment of employees through career planning and continuous management/vocational training.

* Community support services and corporate communication initiatives to meet the national and social responsibilities, as a good corporate citizen.