Sui Southern Gas Company Limited ("SSGC" or "the Company") is a public limited company, incorporated in Pakistan under the Companies Act, 2017. The Company is listed on the Pakistan Stock Exchange. Its registered office is located at SSGC House, Sir Shah Muhammad Suleman Road, Block 14, Gulshan-e-Iqbal, Karachi, which also houses the Company's meter manufacturing plant.

SSGC has a rich history dating back to 1954. It was formally established on March 30, 1989, following the merger of the Karachi Gas Company, Indus Gas Company, and Sui Gas Transmission Company. Today, SSGC is a dynamic energy provider, supplying natural gas to over 3 million customers across Sindh and Balochistan. The Company also operates through two wholly-owned subsidiaries: SSGC LPG Limited (SSL), A fully integrated LPG company that manages the entire supply chain from sourcing and import to storage, bottling, and distribution, ensuring a reliable and economical supply for its customers. SSGC AE (Pvt) Limited (SSGC-AE): This entity is focused on exploring alternative energy opportunities beyond SSGC's core gas business.

Sui Southern Gas Company Limited (SSGC) operates as Pakistan's leading integrated natural gas utility, responsible since 1954 for the transmission, distribution, and network installation of natural gas across Sindh and Balochistan. Functioning as a downstream company, SSGC sources gas in bulk from over twenty-four domestic and international exploration and production companies, distributing it through a robust infrastructure that, as of FY25, includes a high-pressure pipeline network exceeding 4,400 km and a distribution system serving over 160 cities and towns as well as 3,800 villages. Further strengthening its operational capacity, SSGC operates its own Meter Manufacturing Plant, producing G-4 and G-1.6 meters under license from Itron, USA, for both local consumption and international export.

SSGC’s shareholding is majority-owned by the Government of Pakistan (GoP), which controls a 53.25% stake through the President of Pakistan, while the SSGC Employees Empowerment Trust holds 7.25%. Public sector institutions, including banks, development finance institutions (DFIs), insurance companies, non-banking finance companies, Takaful operators, Mutual Funds, and Modarabas collectively represent 15.92% of ownership. The remaining shares are held by mutual funds, directors, the general public, and other institutions, ensuring a diversified public float alongside strong sovereign backing.

As a strategically important public sector utility, SSGC’s extensive pipeline network and operations are considered critical national infrastructure by the Government of Pakistan (GoP). Given its essential role in the energy supply chain, the government’s majority ownership is expected to remain unwavering, providing a high degree of operational and strategic stability.

The GoP, through its two primary gas utility companies, SSGC and SNGPL, holds a dominant combined market share of approximately 79% in Pakistan’s total gas supply. The Ministry of Energy (Petroleum Division) oversees the government’s portfolio and policy formulation for the gas distribution sector. At the same time, the Oil and Gas Regulatory Authority (OGRA) serves as the independent regulatory body, determining tariffs and enforcing sector-wide standards. This structured oversight reinforces SSGC’s entrenched position and operational framework within the national energy landscape.

The GoP recognizes SSGC’s strategic importance as an integral part of the national energy infrastructure. Historically, the government has provided necessary financial support during periods of distress, a commitment documented in a letter from the Finance Division. This established and ongoing sovereign backing underpins SSGC’s credit profile, solidifies its going concern status, and mitigates the Company's standalone financial vulnerabilities.

As of June 30, 2025, the Board comprises ten members, including four Non-Executive Directors, four Independent Directors, and one Executive Director, structured in line with corporate governance best practices. The Company has scheduled an Extraordinary General Meeting on Tuesday, December 23, 2025, to, among other items, confirm the election of eleven Directors for a three-year term.

The Board of Directors currently comprises accomplished professionals with diverse and substantial expertise across the public sector, energy, finance, and governance. The Chairperson, Dr Shamshad Akhtar, brings over 41 years of experience in national and international development, having served as Governor of the State Bank of Pakistan. Independent directors such as Mr Muhammad Razjuddin Monem (oilfield performance), Dr Sohail Khan (oil & gas strategy), and Mr Ayaz Dawood (entrepreneurship and finance) contribute deep sectoral and commercial insight. Government representation is provided by Mr Shakeel Qadir Khan, Chief Secretary of Balochistan, and Ms. Saira Najeeb Ahmed, a senior civil servant specialising in energy and economic policy, while non-executive directors Mr. Shoaib Javed Hussain (insurance and risk) and Mr Zafar Abbas (energy policy) further strengthen the Board’s oversight capability. Notably, Dr Shamshad Akhtar, Mr Muhammad Razjuddin Monem, Dr Sohail Khan, Mr. Ayaz Dawood, Mr Shakeel Qadir Khan, Ms. Saira Najeeb Ahmed, and Mr Shoaib Javed Hussain are among the directors proposed for re-election at the upcoming Extraordinary General Meeting. It is anticipated that following the EGM, the updated Board composition will be formalized, and detailed profiles of any newly appointed members will be made available thereafter. Together, this experienced and well-structured board provides robust strategic guidance and governance aligned with the Company’s role as a critical national utility.

The Board exercised active oversight in FY25, holding 25 meetings to deliberate on operational, financial, and strategic priorities. Governance is further structured through five specialised committees: the Human Resource and Nomination Committee (3 meetings), Finance and Procurement Committee (9 meetings), Audit Committee (10 meetings), Risk Management, Litigation, and HSE & QA Committee (1 meeting), and the Special Committee on UFG (2 meetings). Each committee operates under formal Terms of Reference, providing focused recommendations to the Board on critical areas including financial controls, compliance, risk management, and UFG reduction efforts.

SSGC, as a listed public sector entity, operates within the governance frameworks of the SOE Act 2023 and related codes. The company's financial reporting has received a qualified audit opinion from M/s BDO Ebrahim & Co. for the year ended June 30, 2025, due to unresolved matters, including receivables and IFRS 14 related accounting exemptions. While the company discloses these challenges as per requirements, its financial performance remains critically dependent on regulatory settlements and government support.

The Company maintains a comprehensive and well-defined organizational structure, encompassing key functional divisions such as Transmission, Distribution, Human Resources, Treasury & Finance, Construction, Procurement, Billing, Sales, Internal Audit, Customer Services, Technical Services, Planning & Development, Administrative Services, and Risk Management. Each division is further segmented into specialized sub-departments with clearly delineated responsibilities. These operational units are led by Senior General Managers (SGMs) and General Managers (GMs), supported by teams of qualified professionals. The SGMs and GMs report directly to the Managing Director and Deputy Managing Director (Operations), who in turn are accountable to the Board of Directors, ensuring clear lines of authority and effective operational oversight.

The senior management team comprises the Managing Director, Deputy Managing Director, Senior General Managers, and General Managers, each contributing substantial technical expertise and industry experience to their respective functions. Currently, Mr. Muhammad Amin Rajput is serving as the Acting Managing Director. A Fellow Chartered Accountant and Certified Internal Auditor, Mr. Rajput possesses over 30 years of diversified experience in finance, audit, and management across the oil and gas, energy, manufacturing, and automobile sectors. Before his current role, he held the positions of Chief Financial Officer and Chief Internal Auditor at SSGC, and has served as Chief Internal Auditor at K-Electric and in senior finance roles at Zahid Tractor in Saudi Arabia. Syed Muhammad Saeed Rizvi continues as the Deputy Managing Director (Operations), having been associated with the Company for over a decade. An engineer by profession, he has held key internal positions, including General Manager of the Meter Manufacturing Plant and Senior General Manager of Engineering Services. Mr. Rizvi brings extensive hands-on experience in project management, product quality, development, and operations & manufacturing. The permanent appointment of the Managing Director is expected to be finalized following the constitution of the new Board. Overall, the management team demonstrates a strong blend of financial acumen, operational proficiency, and institutional knowledge, positioning the Company to navigate its strategic and operational challenges effectively.

The management has institutionalized a performance-driven culture through structured assessment mechanisms and results-based accountability aligned with stakeholder expectations. This is supported by the implementation of rigorous performance-based criteria and Key Performance Indicators (KPIs) across leadership, managerial, and technical domains, fostering continuous learning and development. Clear segregation of duties, well-defined reporting lines, and a disciplined hierarchical structure further contribute to operational efficiency and support informed, timely decision-making across the organization.

SSGC utilizes an upgraded Oracle R12 ERP system alongside an IBM Rational Focal Point-based Enterprise Project Portfolio Management solution, enabling centralized oversight of distribution projects with a focus on strategic value and UFG control. The Company also operates a comprehensively enhanced in-house Customer Care and Billing (CC&B) system, which provides a centralized platform for end-to-end customer management, billing, and claims processing.

The Board has instituted a robust internal control framework designed to ensure adherence to principles of probity, integrity, objectivity, and transparency in all stakeholder engagements. The Company continues to strengthen its technological oversight capabilities through the integration of Geographic Information System (GIS) and MAZIK platforms, enhancing real-time operational monitoring and network analysis. The GIS platform consolidates live data from rehabilitation projects and unauthorized usage, supporting improved gas supply planning and management. Furthermore, operational efficiency has been advanced through the automated remote monitoring of 50 Town Border Station (TBS) sites in Karachi, enabling more proactive control of customer usage and network performance.

Pakistan’s primary energy mix remains heavily dependent on fossil fuels, with natural gas and imported RLNG serving as the core components of the national energy system. Gas demand remains anchored in the power, household, and fertilizer sectors, which together account for the bulk of the country’s consumption. In FY24, total gas usage stood at approximately 25.4 million MT, reflecting a slight year-on-year decline, while 9MFY25 saw a further moderation as household and industrial demand softened amid constrained supply. Despite this mild contraction, the fertilizer and power sectors maintained relatively stable offtake, underscoring their limited ability to shift to alternative fuels. Domestic natural gas production continued to decline due to the maturing profile of key fields and limited new additions. Output fell to around 24.0 million MT in FY24 from 25.0 million MT a year earlier, and slipped further to 16.9 million MT in 9MFY25 versus 18.2 million MT in the same period last year. The steady decline in domestic production continues to tighten the supply landscape and elevate the role of imported RLNG, particularly for power and industrial requirements. Total gas supply in FY24 was recorded at roughly 32.5 million MT, a 5.5 percent reduction compared to the prior year. Local natural gas accounted for nearly 24.0 million MT of this supply, while imported RLNG volumes fell to about 8.2 million MT from 9.4 million MT, reflecting high international LNG prices and fiscal limitations. Pakistan’s regasification capacity remains anchored in the two operational LNG terminals—Engro Elengy Terminal Limited (EETL) and Pakistan GasPort Consortium Limited (PGPCL). On the distribution side, SNGPL and SSGC continued to dominate, supplying around 79 percent of total gas in FY24. Their network expansion during 9MFY25, including the extension of main and service pipelines and integration of additional towns and villages, highlights ongoing efforts to enhance system reach. Alongside these utility networks, an independent system also functions, supplying large consumers directly through dedicated transmission arrangements or virtual pipelines, including containerized delivery. Financial stress in the sector remains significant. A major contributor is Unaccounted-for Gas (UFG), which represents the difference between gas purchased and sold. UFG arises primarily from theft, leakages, and measurement errors, and directly affects the profitability of the utilities. High UFG, combined with declining domestic production, elevated RLNG costs, currency depreciation, and fixed capacity payments to LNG terminals, continues to strain the financial sustainability of SNGPL and SSGC. A further system-level risk for the Sui companies stems from the loss of business to captive power plants, which, despite being better priced and more easily recoverable, reduce cash flows by diverting high-volume industrial and power consumers.

Sui Northern Gas Pipelines Limited (SNGPL) holds a 47% share of Pakistan’s total gas market, operating primarily in Punjab, Khyber Pakhtunkhwa, and Islamabad, while Sui Southern Gas Company Limited (SSGC) accounts for approximately 21% of the national gas supply. SSGC serves as the primary distributor in its licensed franchise areas of Sindh and Balochistan, with a customer base of around 3.5 million connections and a relatively predictable revenue stream across residential, commercial, industrial, and power sectors. Despite this, gas supply to the captive power sector has declined sharply in recent years, falling by nearly 49% from 210 MMCFD in FY22 to 107 MMCFD in the initial period of FY26, resulting in reduced throughput and lower contribution to overall revenue. A major operational and financial challenge for SSGC is managing high Unaccounted-for Gas (UFG) losses. In FY25, total UFG stood at roughly 10%, although OGRA determined it at 12% due to pending claims under the Motion for Review (MFR). The main contributor to UFG is Balochistan, where losses exceed 30%, despite the province representing less than 14% of SSGC’s total volumes. In contrast, Karachi is the best-performing region, with UFG around 7%. High UFG in regions such as Balochistan has led to a regulatory revenue disallowance of PKR 18.1 billion. SSGC has filed an MFR with OGRA seeking recognition of PKR 12.8 billion in additional revenue, of which interim relief of PKR 3 billion has been granted. The outcome of this appeal is critical, as it will significantly affect the company’s reported profitability and financial recovery.

During FY25, SSGC supplied 789 MMCF of gas (FY24: 841 MMCF) to consumers across various sectors, including power generation, fertilizer, captive power plants, commercial, and domestic users. The share of captive power in overall demand decreased from 21% to 19%. The Company recorded Net Revenues of PKR 435,073 million (FY24: PKR 465,869 million) from the sale of Indigenous gas and RLNG net of taxes, along with tariff adjustments on indigenous gas and RLNG, which is a receivable from GoP under the provisions of the license for transmission and distribution of natural gas granted to the Company by OGRA.

SSGC was allowed a return of 21.25% (FY24: 26.22%) on its average net operating fixed assets, before financial charges and taxes. However, OGRA applies efficiency-related benchmarks such as Unaccounted for Gas (UFG), Human Resource cost benchmarks, provisions for doubtful debts, and other operational expenses when determining final revenue requirements, resulting in disallowances that directly impact the company’s profitability. In its Final Revenue Requirement determination for FY 2024–25, OGRA permitted SSGC a return of PKR 26,649 million, but disallowed PKR 18,135 million on account of UFG. The company maintained disciplined control over operational costs, including HR expenses, which remained within regulated benchmarks. Additionally, OGRA granted immediate relief of PKR 3,176 million against SSGC’s Motion for Review (MFR) claims totaling PKR 12,846 million, offering some regulatory support and contributing to operational efficiency. Nevertheless, SSGC’s profitability was significantly affected by the substantial UFG disallowance and a sharp decline in bulk sales. Finance costs, though reduced to PKR 12,143 million, continued to weigh on earnings. Persistent operational challenges in Balochistan, where UFG stood at 30.95% and accounted for 35% of the total UFG, further strained performance. As a result, SSGC reported a net profit margin of only 0.62% for FY25, reflecting sustained pressure from regulatory, operational, and regional headwinds.

SSGC's core sustainability strategy remains aggressively reducing Unaccounted-for-Gas (UFG) to improve financial viability. The company has achieved a significant cumulative reduction, lowering overall UFG volumes from 73 BCF in FY 2018-19 to 35 BCF in FY 2024-25. This was driven by massive infrastructure investment, including laying over 2,500 km of new distribution pipelines. However, challenges persist, especially in Balochistan, which accounts for 35% of total UFG despite representing only 14% of the business. While volumetric losses decreased, the provisional UFG percentage rose to 12.07% due to sharply declining indigenous gas supplies. Beyond its core gas distribution, the Company operates through two wholly-owned subsidiaries that support its strategic diversification. SSGC LPG Limited manages a fully integrated LPG supply chain, from import and storage to bottling and distribution, ensuring a reliable alternative fuel supply for customers. Meanwhile, SSGC AE (Pvt) Limited is focused on exploring alternative energy opportunities, with material developments expected in this area. This positions the SSGC group for future energy transitions and potential new revenue streams.

SSGC operates with a severely strained working capital cycle, primarily due to a structural mismatch in its cash flows. While the Company bills consumers regularly for gas supplied, there are prolonged delays in receiving payments from key government entities and bulk consumers, such as K-Electric and Pakistan Steel Mills, which are trapped in the circular debt chain. These delays result in extended receivable days, which averaged 108 days in FY25. Concurrently, SSGC is obligated to make timely payments to its own suppliers, including gas producers like OGDCL and PPL, and to meet other operational expenses. This cash conversion bottleneck forces the Company to bridge the funding gap through increased reliance on short-term borrowing lines to support day-to-day operations and meet immediate liabilities. As a consequence, SSGC's net working capital cycle remains deeply negative at -648 days, indicating that its suppliers and other creditors are effectively financing its operations for nearly two years. To sustain this structure, total borrowings escalated to PKR 137,300 million as of June 2025. Ultimately, the Company’s liquidity and ability to meet its obligations are not solely a function of consumer billing but remain fundamentally dependent on the realization of overdue circular debt-related receivables from the Government of Pakistan and other state-owned entities.

SSGC’s financial coverage metrics came under pressure during FY25, driven by an increase in finance costs to PKR 12,143 million and a contraction in operating cash flow, which declined to PKR 7,673 million. This resulted in an interest coverage ratio (EBITDA/Finance Cost) of 3.4x, while cash-based coverage (FCFO/Finance Cost) fell to 0.0x. Going forward, borrowing is expected to rise to support the company’s rehabilitation plan in the coming years. Effective financial planning and strict operational discipline will be essential to maintain adequate cash flows and ensure the company’s ability to meet its obligations.

SSGC has obtained both long-term and short-term borrowings to finance capital expenditures and meet working capital requirements. As of June 30, 2025, the Company's total borrowings stood at PKR 137,300 million, significantly higher than PKR 81,340 million in FY24. Loans under sovereign guarantee were PKR 4,666 million as of 1Q FY26 (PKR 5,833 million in FY 25). The Company’s leverage ratio increased to 94.3% as of June 30, 2025, from 93.2% in FY24, reflecting higher debt levels. Despite a net profit of PKR 2,689 million in FY25, accumulated losses continued to constrain equity, though it improved to PKR 8,268 million.