The Pakistan Credit Rating Agency Limited
Press Release


Ahsan Zahid

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Upgrades the Entity Ratings of Sui Southern Gas Company Limited

Rating Type Entity
(31-Jan-23 )
(15-Dec-22 )
Action Upgrade Maintain
Long Term A+ A
Short Term A1 A2
Outlook Stable Stable
Rating Watch Yes Yes

SSGC business profile is considered adequate owing to its exclusive license to operate in areas of the franchise (provinces of Sindh and Balochistan) and guaranteed return on its net operating assets. Subsequent to the unfolding of the strategy by the incumbent leadership, company posted a positive bottom line amounting to PKR 1,955mln in FY21 as a result of efficiently re-strategizing its operations to eliminate the inefficiencies pertaining to UFG and reduced it to 15.31% down from 17.25% ultimately supporting the bottom line. In addition, company is continuously working to diversify its business streams in order to manage/ earn Non-Operating Income and ultimately improve the Company’s financial position. Cognizant of the challenges being faced by the company. The multi-pronged strategy is being adopted. This will enable new gas addition to the system, primarily from bio material and secondarily from the non-functional wells. To accomplish this, the company already incorporated a fully owned subsidiary; SSGC Alternate Energy (Pvt.) Ltd. Under the proposition, revenue will be generated through toll charges by using current infrastructure. However, timely settlement of pending receivables is also important as the company’s liquidity profile is significantly stretched. The management has been working vigorously to resolve the liquidity issues. Furthermore, SSGC has not issued its financial statements for FY22; quarterly financials are also pending. The management is obligated to issue its quarterly statements and yearly financial statements in due time, however; the company sought an extension on issuing of accounts owing to the finalization of a petition filed with OGRA.
The company's financial risk profile was deteriorated owing to consistent losses that have been made for the last few years. However, company’s resilience proved by reported profit during FY21 reflects in Assigned Ratings. Also, the delay in the publishing of financial statements is a consideration for rating watch. Going forward, consistency in profits and follow up on the initiatives will be crucial for the Ratings.

About the Entity
SSGC is engaged in the business of purchase, transmission, and distribution of natural gas. The company is catering to the requirements of ~2.8mln customers. The government holds the largest direct stake (~53%). The eleven-member board comprises NEDs. Dr. Shamshad Akhtar is the chairperson of the board and Mr. Muhammad Imran Maniar took the position of MD in Feb 21. He is accompanied by an experienced team.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.