SSGC earns profit of Rs 117.58m

Karachi –– Sui Southern Gas Company (SSGC) on April 26, 2011 announced a profit of Rs117.584 million for January-March 2011 quarter, a sharp recovery from the loss of Rs525.9 million incurred in the same period of previous year.

The state-run utility’s nine-month (July-March 2010/11) results show a profit of Rs2.23 billion against a loss of Rs306 million in the same period of previous year.

SSGC’s recovery signals that the company has started reaping benefit of a long-fought battle with the regulator over inclusion of non-core income in a separate account.

“Our annual income of around Rs3 billion from sale of condensate gas, production of meters and royalty from a LPG producer was always made part of the tariff. Now we are treating it as a separate income,” said Shahid Jafferi, Chief Financial Officer of SSGC.

The revenues of SSGC are regulated by Oil and Gas Regulatory Authority (Ogra). How much the company earns is decided at the start of each year on the basis of a predefined formula, which takes into account all the expenses, revenues and returns.

The gas tariff thus determined also included earnings from other sources, which SSGC believes are not part of the core business and should not be made part of the tariff, said Jafferi.

Loss of gas due to leakages in the pipelines and because of theft results in a penalty on SSGC, which landed it in the red for some years.

“Ogra allowed us to include non-core income over and above tariff in 2009/10, but later reversed its decision. We went to court and won a stay order,” he said. “Legally, we are on the right side and there is little chance of us losing this battle.”

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