SSGC fails to reduce UFG losses

Company performance marred by hiring on key posts on political grounds

Zafar Bhutta June 09, 2020

ISLAMABAD: Ad hocism has marred the performance of Sui Southern Gas Company (SSGC), which has been operating without a permanent managing director since 2016.

The current board of directors has once again published advertisements for hiring a new managing director.

Appointments on key posts on the basis of political affiliations have largely contributed to the decline in the company’s performance.

The unaccounted-for-gas (UFG) level of the state-run gas utility has continued to rise, swelling to over 18%, which has translated into Rs25 billion worth of revenue loss, pushing the company towards bankruptcy. The current management and board have been unable to reduce UFG.

Sources told The Express Tribune that the UFG reduction target of the company, as agreed with the ministry and board of directors, was 19 billion cubic feet (bcf) for the current fiscal year. However, in 11 months (July-May) of the ongoing fiscal year, SSGC managed to reduce the losses by only 2 bcf. Even till the close of June, this will not be more than 3 bcf.

SSGC will close the current fiscal year at 18% UFG level, which will be two percentage points more than last year and will cost the company a penalty of Rs25 billion by the regulator. Furthermore, accounts of the company have not been finalised since 2017. Despite the below-par performance, the board of directors has approved the hiring of a fourth deputy managing director and senior general managers from the open market, denying promotion to the company’s employees.

The company already has three deputy managing directors, whose appointments are questionable. No other state-run company has that much deputy managing directors.

Despite repeated attempts, SSGC did not respond to the request for comments. Back in 2016, the then managing director appointed two deputy managing directors through external hiring. Even though none of the candidates, who had applied for the position, qualified or had the requisite skills, they were hired because of political influence.

During the tenure of Pakistan Muslim League-Nawaz (PML-N) government, the board approved their appointments as senior general managers instead of deputy managing directors. However, with their political clout, they managed to get themselves promoted as deputy managing directors within one year of service. The minimum tenure required to be eligible for promotion is three years.

Simultaneously, a senior general manager for the human resources department was also hired by the then managing director. The appointment was also not based on academic qualifications.

The senior general manager’s hiring was examined by the government auditor and his report recommended that not only his experience was fake, but his degree was also not in human resources but in international marketing. The auditor recommended that the employee should be terminated immediately and all salaries and benefits should be recovered from him.

However, the SSGC management conducted an internal inquiry and gave the person a clean chit. A case is pending against him in the Federal Investigation Agency (FIA) and report is awaited.

In another instance, the utility appointed an individual who, despite not having a degree in engineering and not being recognised by the Pakistan Engineering Council, was made the head of engineering services. As per the ruling of the Supreme Court, announced in October 2018, a person who does not possess a Bachelor’s Degree in Engineering cannot be registered with the Pakistan Engineering Council and cannot be appointed as the head of an engineering department.

The ruling was conveyed to the SSGC MD through the Ministry of Energy for strict compliance.

The current board of directors has failed to appoint a permanent managing director since 2016 and the position has been handled in rotation by the three deputy managing directors. In the name of reforms, the SSGC board has decided to hire people on all senior positions from the market, including the technical position. It is worth mentioning that by the time these people come on board, the tenure of the board would have been finished.

Expertise related to gas distribution is not available in the open market, therefore, there is a higher probability that the newly hired people will lack the qualification and knowledge required by the company.

Meanwhile, in-house executives, who are eligible for these positions, will be neglected, which may prove to be counter-productive for the utility. In a bid to establish the board’s authority over management, the board has ordered that disciplinary inquiries be initiated against all those who raise voice against any wrongdoing.

Published in The Express Tribune, June 10th, 2020.

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