Losses due to theft and leakage of gas reach Rs. 3.1 billion in the first quarter

Unaccounted for Gas Losses (UGL) for Pakistan’s gas distribution companies have raised to an alarmingly huge figure of Rs. 3.1 billion for the first quarter of financial year 2012. Sui Southern Gas Company (SSGC)
and Sui Northern Gad Pipelines (SNGP) have recently reported the massive figure of loss for the first quarter, primly caused by gas leakage and theft on large scale in the country.

The gas shortage crisis in the country is already infuriating the users, who are suffering from supply cut downs on regular basis. The gas distribution companies are already facing serious challenges in supply the required amount
of gas to its domestic and industrial users and such heavy losses can certainly hinder their attempts to maintain a constant supply to the customers.

Huge expenditures have been incurred in the recent past to curb the UFG losses but the figure has stilled reached its peak value this time, amounting to 11 per cent of all gas produced in the first quarter.

The gas distribution companies, SSGC and SNGP, witnessed a significant drop in the net earnings in the first quarter of the financial year. Their net earnings were reduced to Rs. 964 million, which is 39 per cent lesser than the
revenues of the same time period last year. Increase of 34 per cent in UFG losses to Rs3.1 billion and jump of 44 per cent in financial charges to Rs1.8 billion, were thought to be the culprits that caused dent in sector profitability.

The profitability of a gas distribution company hugely depends upon the average operating fixed assets and hence, the capital expenditure incurred by these companies certainly boosts up their profitability in the future. In the
first quarter of the financial year 2012, the sector only budgets to invest Rs. 2.3 billion as the capital expenditure, as compared to last year’s investment of Rs. 5.3 billion for the corresponding period.

The gas distribution sector has recently got Rs. 7 billion loan from financial institutions and is hopeful of making the situation better.

“Last ease-off in policy rate by 150bps to 12 per cent, however will help the sector trim its net financial charges going forward,” analyst Abdul Azeem at stock brokerage firm Invest Cap said.

Short URL: https://www.newspakistan.pk/?p=3866

Posted by Farhan Hameed on Nov 17 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry