SSGC faces Rs9.3bn loss in first half of FY24

The Sui Southern Gas Company (SSGC), a state-owned entity responsible for supplying natural gas in Sindh and Balochistan, disclosed a significant loss of Rs9.3 billion for the first half of the fiscal year 2022-23.

The announcement came through a filing with the Pakistan Stock Exchange. This loss marks a substantial increase from the Rs2.13 loss per share recorded in the corresponding period the previous year, escalating to Rs10.58 per share by the end of December 2022.

Despite a 10.3 percent increase in net sales reaching Rs208.72 billion, the company faced a gross loss of Rs2.2 billion, primarily due to a 12.1 percent hike in the cost of sales amounting to Rs210.92 billion.

Analysts point to elevated gas purchase prices, transmission losses, and higher depreciation and amortization charges as key factors behind the financial downturn.

Operational expenses saw a 21.2 percent rise, totaling Rs10.13 billion, while other income declined by 4.1 percent to Rs7.8 billion.

Finance costs also surged by 35.6 percent, reaching Rs3.01 billion, attributed mainly to increased interest rates and borrowing.

Significant outstanding receivables were noted from K-Electric, Karachi’s main power supplier, and Pakistan Steel Mills, totaling Rs29.97 billion and Rs25.17 billion, respectively.

Both entities have challenged the late payment surcharges levied by SSGC, leading to the decision to recognize these charges on a receipt basis starting July 2012.

The recoverability and timing of payments from K-Electric and Pakistan Steel Mills remain uncertain due to their challenging operational and financial situations and the accumulation of arrears.

SSGC acknowledged its reliance on the Pakistani government’s financial support to sustain operations, confirming the government’s commitment to assist in maintaining the company’s status.