Pacra upgrades SSGC’s credit rating

KARACHI: The Pakistan Credit Rating Agency (Pacra) has upgraded the credit rating of Sui Southern Gas Company Limited (SSGC), reflecting significant improvements in the company’s operational efficiency and a turnaround in its financial performance, which is expected to strengthen further in the coming periods.

According to a statement issued by the company on Thursday, SSGC is Pakistan’s leading integrated public-limited natural gas utility, responsible for the transmission and distribution of gas across Sindh and Balochistan. The Pakistan government holds the majority of the company’s shares, both directly and indirectly.

Through rigorous measures and the implementation of a comprehensive strategy, SSGC has achieved a consistent reduction in unaccounted-for gas (UFG) losses over the past three years. Notably, extensive initiatives by the company’s Board of Directors and management led to an unprecedented decline in UFG losses in the Balochistan region during FY 2024, alongside a remarkable improvement in Karachi, where UFG losses were reduced to single digits.

As a result, SSGC’s net loss has decreased significantly, dropping from Rs 11.44 billion in FY2021-22 to Rs1.6 billion in FY2022-23. Although UFG losses remain above the regulatory benchmark, the company is optimistic about its future trajectory. To address system inefficiencies, SSGC has launched a large-scale rehabilitation programme aimed at mitigating system leakages and improving network integrity.

Timely settlement of outstanding receivables is also critical, as SSGC’s liquidity profile remains under pressure. The company is actively working to diversify its revenue streams to generate non-operating income, which will help establish sustainable income sources for the parent company.

SSGC’s financial recovery is underscored by a significant improvement in its bottom line. The company reported a net profit of Rs 4,158 million during the first quarter of FY 2023-24, leading to positive equity by the end of September 2023.