SSGC Navigates Challenging Landscape with UFG Losses and Economic Pressures

Sui Southern Gas Company (SSGC), the largest natural gas distributor in Pakistan, is grappling with significant financial losses due to a combination of infrastructure deficiencies, economic downturn, and rising operational costs. The company's net profit for the financial year 2022-2023 declined by 32% compared to the previous year, primarily attributed to a surge in unaccounted for gas (UFG) losses.

UFG losses, also known as line losses or leakage, refer to the natural gas that is lost during transmission and distribution due to pipeline leaks, theft, and metering inaccuracies. SSGC's UFG losses have been consistently high, hovering around 18%, far exceeding the industry benchmark of 5%.

The aging infrastructure of SSGC's pipeline network is a major contributor to UFG losses. Over 60% of the company's pipelines are over 30 years old and are prone to leakage. Additionally, the lack of adequate security measures has made it easier for gas theft to occur.

The economic downturn in Pakistan has also impacted SSGC's financial performance. The decline in industrial activity has led to a reduction in gas demand, resulting in lower revenue for the company. Furthermore, the rising inflation has increased SSGC's operational costs, putting further pressure on its profitability.

To address these challenges, SSGC has embarked on a multi-pronged strategy to reduce UFG losses, improve infrastructure, and enhance operational efficiency. The company is investing heavily in pipeline modernization, implementing advanced metering technologies, and intensifying its anti-theft measures.

SSGC is also exploring alternative gas sources, such as liquefied natural gas (LNG), to supplement its supply and meet the growing demand for natural gas in Pakistan. The company has signed a long-term LNG import agreement with Qatar and is developing LNG terminals to facilitate the import and distribution of LNG.

Despite the challenges it faces, SSGC remains committed to its role as a vital provider of natural gas to Pakistan's economy. The company's efforts to reduce UFG losses, improve infrastructure, and explore alternative gas sources are crucial for ensuring a sustainable and secure gas supply for the country.

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