Transforming SSGC’s operational and financial landscape

Being one of the country’s two premier gas utilities, the Sui Southern Gas Company manages gas transmission and distribution in its franchise provinces of Sindh and Balochistan, with a network spanning a massive 55,000 kilometres. The Company caters to 3.2 million customers, including 4,500 industries.

Historically, the Sui Southern Gas Company (SSGC) suffered from a host of external and internal challenges and the gas utility’s financial statements were not finalised for several years. Losses continued to accumulate, and unaccounted-for-gas (UFG) or line losses had become uncontainable. Cumulative inter-enterprises liabilities swelled, resulting in gas sector circular debt that ran into more than a trillion Rupees. Meanwhile, the depleting indigenous gas reserve situation worsened the condition.

In this bleak scenario, a firm commitment had to be made to introduce extensive changes and transform the culture of the organisation to deliver positive results. Relentless efforts needed to be channelised towards developing and implementing a new corporate strategy to make SSGC operationally and financially sustainable. Besides strengthening the Company’s financials, the priority before the Company’s Board and Management was to deal with legacy issues, lift the financials, drastically reduce UFG, reform HR systems, and pursue business diversification. Exemplary leadership, along with strategic foresight, was indispensable to steer the Company through economic headwinds, regulatory challenges, and sectoral transformation. 

Strategic UFG reduction and operational excellence

A cornerstone of the agenda was the consistent and focused reduction of UFG, which is critical for sustainable growth, financial well-being, and positive investments. Backed by a comprehensive and improved strategy, the UFG reduction plan and institutional framework were restructured to allow for coordinated and holistic action at the zonal level.

SSGC management has been undertaking extensive initiatives to improve its bottom line through vigorous and sustainable reduction in UFG. Targeted efforts in fiscal year (FY) 2023-24 contributed to a year-over-year reduction in UFG, resulting in a cumulative reduction of over 40 billion cubic feet of UFG from FY 2018–19 to FY 2023-24.

UFG in SSGC witnessed a five-year consecutive decline, falling from over 17.10% to 10.59%, culminating in an 8.84 BCF reduction in FY 2022–23 alone. This was imperative for ensuring some much-needed operational discipline. Upper Sindh achieved a 3 BCF reduction in UFG year over year, with a percentage decrease from 13.24% to a single-digit figure. On the other hand, Balochistan remained a primary focus for UFG reduction, with aggregate UFG remaining at 15 BCF during FY 2023-24, which is a net reduction of 11 BCF over the previous year.

Network Rehabilitation: to reduce gas leakages and strengthen the measurement and billing system, the SSGC Board authorised investments that have upgraded its gas pipeline network through an unprecedented enhancement of rehabilitation capacity. Completion of approximately 1,500 km of pipeline rehabilitation in 2023-24, as part of an initiative that involves rehabilitation of 7,500 km distribution network over the next 3 years, especially in high-loss areas of Karachi, Upper Sindh, and Balochistan, has significantly strengthened system integrity and better service to the customers. 

Graph displaying SSGC's UFG trend from 2018-2025

Financial turnaround

The Company achieved yet another milestone by overcoming fiscal pressures and regulatory constraints to reposition itself on the path to financial recovery. The upshot was a financial turnaround from a loss of Rs8 billion in FY 2021–22 to a profit of Rs9 billion in FY 2023–24. Earnings per share (EPS) surged from negative Rs12.99 in FY 2021–22 to positive Rs7.76 in FY 2023–24. A Negative Equity of Rs23.7 billion to a positive equity of Rs5.9 billion, and the outcome of a well-planned financial strategy and a foundation of SSGC's sustainable future.

Capitalisation

Capitalisation of development projects rose from Rs8 billion to Rs17.5 billion per year, boosting the Company’s asset base and improving Return on Capital. New resources, strategies and systems are in place to target further capitalisation to around Rs40 billion by the next two years. In addition, operating expenditures have been kept within OGRA-approved limits, avoiding disallowances and reinforcing newfound fiscal discipline.

Localisation

Over the last several years, SSGC’s Meter Manufacturing Plant has also achieved several milestones, one of which is the indigenisation of meter parts under a technology transfer agreement and revision of production processes as per international standards, to ensure sustainable and quality-oriented production of gas meters. Localisation of G4 / V3 meters from 53% to 97% and G-1.6 to 98% is indeed a notable feat. The Company has also made extensive efforts to export locally manufactured gas meters to the Middle East and African countries. Production of meters has soared, and targets which were once thought difficult were surpassed.

Strengthening subsidiaries, energy diversification

In the wake of gas shortages, SSGC has been positioning itself as a diversified energy company. SSGC LPG Limited (SLL), a fully-owned subsidiary of SSGC, is being harnessed to enhance LPG supplies. SLL achieved record sales of 98,700 MT and a 7.7% market share, earning Rs770 million in net profit in FY 2022–23 and Rs1.5 billion in 2023-24. In order to enhance its value proposition, SSGC has been promoting business diversification through SSGC Alternate Energy (Pvt.) Ltd., a relatively new subsidiary formed to focus on multiple clean energy fronts, including biogas, biomethane, liquefied natural gas (LNG), and hydrogen. 

Innovation and risk management

With a strong emphasis on modernising systems and processes, automation of procurement, complaint resolution, and customer service through online platforms and process automation is also underway. Moreover, the implementation of an Enterprise Risk Management and Information Security Management System frameworks has also laid the foundation for a robust governance infrastructure.  A specialised GIS-based UFG reduction application was zealously implemented, integrating network monitoring with actionable insights for field operations. The Company remains confident that continued focus on digital transformation will lead to improved operational efficiency and service delivery.

Governance and regulation

SSGC has also attempted to meet the formidable challenges of Key Monitoring Indicators (KMI) targets set by OGRA. Following active engagements with the Authority, SSGC achieved an unprecedented 99% KMI acceptance of gas volume claims under OGRA’s KMIs in FY 2023–24. In addition, the Company has engaged proactively with OGRA and government stakeholders to resolve critical issues such as UFG allowance on Regasified LNG, tariff differentials, and circular debt.

Human capital development, stakeholder engagement

The Company’s Human Resources function has played a pivotal role in supporting organisational transformation, workforce development, and operational readiness. Recognising the role of the Company workforce in achieving strategic goals, over 5,580 man-days of training programs were conducted to build technical, managerial, and safety competencies. In addition, new leadership development programs and talent acquisition strategies were implemented to ensure long-term organisational vitality and growth.

Improvement in the incentive framework also includes the introduction of a new salary scale, a competitive, merit-based and transparent recruitment system, and a best practice performance management system backed by Key Performance Indicators (KPIs). Skill gap analysis is underway to hire the best-qualified and most talented team possible. Even international talent was hunted for top positions to ensure qualitative as well as quantitative transformational changes in the work culture of the organisation, which have already started showing trickle-down results. 

The achievements by SSGC in diverse functional areas, especially over the last three years, have laid a strong foundation for future growth, strategic agility, and national energy security.   Corporate reforms and investments to enhance the accessibility and sustainability of its network are expected to deliver cost efficiency and results delivery effectiveness. Moreover, stronger financial results and UFG reduction should generate resources for increasing investments in the rehabilitation of the transmission and distribution system.