The Board of Directors of Sui Southern Gas Company (SSGC) has approved the third quarter audited financial results ending on March 31, 2005. The company registered a 7 percent growth in sales volume during the period to 251,283 mmcf, and the corresponding sales value rose by 15 percent to Rs 38.7 billion. This increase was mainly contributed by the fulfilment of additional demand from fertiliser manufacturers and other industrial customers. As against this, there was a 23 percent increase in the cost of gas, primarily due to a change in the supply-mix of gas to more expensive fields, as supplies from older fields, like Sui gas field, continue to decline.
Besides, the company has little control over the wellhead prices of gas, as they are determined by the Government of Pakistan, based on international price of crude oil and agreements with E&P companies which operate the gas fields.
The company's performance during the period under review also reflects a significant growth in capital expenditure of Rs 4.1 billion.
The net profit for the first nine months amounted to Rs 655 million versus Rs 757 million reported for the comparable period of last year.
Meanwhile, operating costs as a percentage of revenue declined to 7.2 percent from 7.4 percent, and financial charges were cumulatively lower by Rs 122 million, over the corresponding nine-month period last year, on account of more effective financials control.
The transmission and distribution projects continued to progress well in the third quarter.
An additional 580 km of mains and services were laid during the period, which is an increase of 31 percent over the same period of last year. About 75 new towns and villages were thus added to the gas supply network, depicting a threefold increase over last year as well as 453 km of new pipeline was laid.
A major milestone for transmission and distribution was the timely inauguration of gas supply to Kalat by the President of Pakistan on April 1.
The capital expenditure of Rs 4.1 billion at the end of third quarter reflects an appreciable increase over previous periods and is part of the company's five-year Rs 40 billion expansion plan designed to increase gas availability and rehabilitate the pipeline network.
The fixed asset base in third quarter grew by Rs 1.7 billion and the trend is expected to continue in the last quarter.
The company has embarked on a major program to reduce the system gas losses (UFG) by taking affective measures to control gas theft and to rehabilitate the network on fast track basis. But the stringent benchmark prescribed for UFG by the regulator has impacted the profitability during the quarter under review.
The company is preparing to file a petition for the review of the UFG benchmark by the regulator, keeping in mind the ground realities including a large network, ageing distribution system and the incidence of gas theft.
It is expected that with the re-fixing of UFG benchmark and the system gas loss reduction programme initiated by the company, the financial results will undergo significant improvement in the foreseeable future.
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