SSGC to introduce new venture, SSGC AE

May 09, 2023 (MLN): Sui Southern Gas Company (PSX: SSGC) is all set to introduce its new venture, SSGC AE (Alternate Energy) which is expected to bring around Rs8 billion by tapping into other markets and offering renewable energy solutions, the management of the company revealed during the corporate briefing held on Monday.

With this diversification strategy, the company's aim is to increase non-operating income and explore opportunities in non-core businesses, such as the purchase and sale of gas at competitive rates.

SSGC plans to make its operations more efficient, by generating around 25MW power from waste – WHRS Method, a technique that uses waste heat from industrial processes to produce electricity through a steam turbine or an organic Rankine cycle.

They also highlighted Coal to Gas (C2G) and Coal to Liquid (C2L) processes, that convert coal into synthetic natural gas or liquid fuels, such as diesel or gasoline.

These processes can reduce the dependence on imported oil and gas and provide cleaner alternatives to coal combustion.

Another opportunity SSGC AE is looking at is to buy Biogas at $7-7.5 and subsequently sell it for $9-9.5 per mmbtu, generating additional income.

Furthermore, the company expects to recover Gas Development Surcharge (GDS) worth Rs210bn when gas prices go up.

The corporate briefing also discussed the company's financial information for 2022, operational developments, and address questions from participants.

During the briefing, SSGC highlighted its notable financial achievements in 2022. The company reported a profit after tax (PAT) of Rs736 million, a significant increase of 3.02x compared to the previous year.

Moreover, SSGC successfully improved its working capital position from a deficit of Rs10.35bn to Rs3.68bn.

Several strategic and operational developments were discussed during the meeting. SSGC informed participants about its ongoing operations to curb gas theft and illegal usage. The company has identified approximately 100,000 unauthorized gas users out of an estimated 700,000 and initiated the billing process with the goal of addressing the entire issue.

Additionally, SSGC shared its efforts to address circular debt challenges, including the resolution of outstanding payments with entities like K-Electric and Pakistan Steel Mills Corporation (PSML).

The settlement of admitted liabilities of PSML of Rs48bn i.e. Principal and admitted LPS has been agreed between SSGC and PSML, SSGC has purposed to swap this debt with a 60-year lease of around 1200-acre land instead.

Furthermore, the management of SSGC emphasized its commitment to localization and innovation. The company's meter manufacturing plant achieved an impressive localization rate.

With G-1.6 Gas Meter achieving 99%, and AMR enabled G-4 Gas Meter from 57% to 97% this year, resulting in significant cost reduction.

SSGC also revealed plans for a new remote-controlled meter, the G6, and expressed its intentions to aggressively explore export opportunities for domestic gas meters.

Moreover, SSGC provided an update on its LPG (liquefied petroleum gas) business, highlighting significant achievements in market share and sales volume. The company achieved a market share of 65% in March 2023 and improved the LPG sale market from 2.5% to 7%.

SSGC LPG planned to achieve 124k in Terminal Volume (MT), which has already been achieved in just March 2023.

SSGC LPG has also established brand shops, warehouses, and delivery services to enhance customer experience.

SSGC's financial performance and strategic initiatives showcased during the meeting reflect the company's commitment to growth, innovation, and addressing key challenges in the energy sector.

The corporate briefing concluded with a question and answer session where participants had the opportunity to seek clarifications and additional information.

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