Report On Sui Gas Company Ltd Commerce Essay

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SUI GAS COMPANY (SGC)

SUI gas company Ltd (SGC) is the Pakistan's leading integrated energy utility company, which is powering the national economy by providing 360 BCF (Billon per cubic feet) of natural gas annually, at affordable prices to 1.98 million industrial, commercial and domestic customers. SGC transmission and distribution system is comprised over 3,000 km of high pressure pipeline and 27542 km distribution network. Gas meter manufacturing plant with an annual production capacity of avers 550,000 meters. SGC makes gas available to customer's at the most unimaginable at the most unimaginable places in the provinces of sindh and Balochistan, while promoting conservation of the environment pursuing best practices in corporate governance.

HISTORY

The SUI Gas Company (SGC) (Formerly Sui Gas Transmission Company Limited) was formed in 1954. The Company in its present shape was formed on March 30, 1989 following a series of mergers of three pioneering companies, namely Sui Gas Transmission Company Limited, Karachi Gas Company Limited and Indus Gas Company Limited. SUI Gas Company is Pakistan's leading integrated gas company. The company is engaged in the business of transmission and distribution of natural gas in southern part of Pakistan. SUI Gas Company transmission system extends from Sui, Balochistan to Karachi, Sindh.

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The company also owns and operates the only gas meter manufacturing plant in the country, under an agreement with Schlumberger Industries, France. The Company is listed on the Karachi, Lahore and Islamabad Stock Exchanges.

The Company is managed by an autonomous Board of Directors for policy guidelines and overall control. Presently, SGC's Board comprises 14 members. The Managing Director/Chief Executive is nominee of Government of Pakistan (GOP) and has been delegated with such powers by the Board of Directors as are necessary to effective conduct the business of the company

Company Mission

To meet the energy requirement of customer through reliable environment friendly and reliable environment and sustainable supply of natural gas while conducting company business professional, professional , efficiently, ethically and with responsibility of all our stake holders.

Vision

Integrity

Keep Company's Interest above self. Acts in ethical manner. Promote ethical business environment. Take effective actions if observers unethical behavior or situation. Seen & known to be honest. Lives within means. Intellectually honest.

Excellence

Makes positive contribution towards the achievement of SGC's Vision. Strives for Continuous improvement. Respond effectively to customer needs. Takes timely & Quality decisions.

Team Work

Builds strong relationships within across functions. Works well with all type of peoples and corporate with others. Solicits and share ideas/best practice with others. Supports the achievements of Company/team goals. Contributes to team effectiveness using people's different skills and styles. Arrives at constructive solutions while maintaining positive working relationships. Demonstrates sensitivity.

Responsibility Of Stake Holders Stays abreast of change in operating environment that impacts our business (i.e. markets, competitors, technology, customers, suppliers, employees, regulatory, political and public). Create solutions to make customer needs. Develops colleagues and team members to

improve their skills and performance. Ensure optimum utilization of resources. Balances short term and long term priorities to maximize on results. Ensures compliance of law.

SGC INFRASTRUCTURE

Transmission Network 3,062 (Km)

Distribution Network 27,542 (Km)

Compression Capacity 62,600 (HP)

DISTRICTS ON GAS

Sindh : 19

Balochistan : 10

TOWN/ VILLAGES CONNECTED

Towns :93

Villages :1,138

CUSTOMERS

Industrial : 3,140

Commercial :21,700

Domestic :1,919,413

ORGANISATIONAL STRUCTURE OF (SGC)

Managing Director

Finance

Management

Service

Customer

Service

Engineering

Service

Board Of

Director

Deputy Managing Director

Distribution

Internal Audit

Company

Secretary

Accounts

Finance

Treasury

Corporate

Planning

Information

Technology

Telecom/

SCADA

Human Resource

Administration

Services

Customer

Relations

Sales

Billing

Health Safety

Planning &

Development

Measurement

Electrical

Service

Service

Material Management

Sindh

Karachi

Distribution

Construction

Karachi

Quetta

Corporate

Communication

Privatization Cell

U.F.G Cell

Planning & Construction

MANAGEMENT FUNCTION

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SUI Gas Company Ltd (SGC) is progressive and dynamic as it is managed by sound professionals in each field. Direct access of production, sales and financial data is available across all levels of management, any day and any time.

INTERNAL AUDITING DEPARTMENT

Internal auditing department at (SGC) perform professional activity involved in helping organizations achieve their stated objectives. It does this by utilizing a systematic methodology for analyzing business processes, procedures and activities with the goal of highlighting organizational problems and recommending solutions. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. The scope of internal auditing within an organization is broad and may involve topics such as the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations.

Internal auditing frequently involves measuring compliance with the entity's policies and procedures. However, Internal auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. As a result of their broad scope of involvement, internal auditors may have a variety of higher educational and professional backgrounds.

SEVICES DEPARTMENT

CUSTOMER MANAGEMENT

DOMESTIC & COMMERCIAL SERVICES

SUI Gas Company Ltd (SGC) use to offer many services to the domestic & commercial customer.

Submission and Registration for new domestic and commercial connections.

Conversion from domestic to commercial connection.

Conversion from commercial to domestic connection.

Customer relationship.

Refund of connection charges where connection is not required.

Restoration of old disconnected connections.

Additional/ Alteration and enhancement of gas load of existing domestic and low pressure commercial customer.

INDUSTRIAL SERVICES

SUI gas company always to promote industrial activities in the country. And they present many services to Industrial costumers.

Intermediate gas pipe line (IMPL), These pipelines will be normally laid for multistoried buildings, departments and housing schemes on customer's cost, where main extension is not possible. These buildings are constructed in shape of numbers of independent blocks and residential units.

Main extensions for residential and commercial customers, these mains are constructed from the outlet up to the prospective consumer premises i.e. in streets of Cities, Towns & Villages. The Normal pressure of gas is maintained.

Acknowledgment and registration of industrial application for gas connection. New applications will be received from the prospective customer on SGC enquiry form for new/extension/ alteration, Industrial, Power Generation, CNG Station and change of tariff cases, along with all the requisite documents as mentioned therein.

Enhancement of load. Those industries who apply for extension in load will submit duly filled enquiry form giving details of additional gas burning equipments, gas load requirement, working hours, and factory layout plans showing the proposed location of new gas burning equipment. Ownership and other valid documents already submitted by the customer will not be asked again.

ACCOUNTS DEPARTMENT

This department provides the company with financial analysis and investments. The company has a good relationship with the foreign and local banks.

 

2004

2005

2006

2007

EPS

1.33

1.51

0.43

1.49

Profits

891,717

1,012,501

290,379

996,712

HUMAN RESOURCE DEPARTMENT

SGC is an organization, which believes in:

Innovation

Employee involvement and rewarding employees

Open book management.

Continuous improvement

Workers at SGC are free to make suggestions, express their disapprovals, and take an active part in management. If an idea is worthwhile it is taken into consideration and implemented in future irrespective of the level it came from. The ideas can range from dealing with the customers to top management.

CUSTOMER RELATIONSHIP

Customer relationship is divided into following divisions.

BILL PAYMENT OPTIONS

To facilitate the customer SGC provide various bill payment options.

Banks.

ATM.

Post Office.

PSO Station.

NADRA.

Online payment.

ARY Sahulat Center.

Customer Facilitation Centers.

SUI Gas Company (SGC) has launched an SMS service that allows its customers to access billing information.

Social & Environmental Responsibilities

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As a public utility, SGC is committed to the present and future well being to people and the environment in which we live. The commitment is to be pursued with a goal of continuous improvement and guided by the following principles:

Encourage and expect each employee to be environmental responsible and to conduct work practice in a safe manner.

Build health and safety facility and environment consideration into all phases of the business including products and technology discovery and development.

Encourage and promote waste minimization.

Actively participate with government agencies and other appropriate groups to insure that development and implementation of environmental, health and safety policies.

Train worker for safe work practice.

MAJOR ENERGY CRISIS FEARED

Pakistan is most likely to face a major energy crisis in natural gas, power and oil in the next three to four years that could choke the economic growth for many years to come, Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,250MW by 2010, the oil demand would also increase by over 23% to about 21% million tons in 2010.

This would leave a total deficit of about nine million tons of diesel and furnace oil imports, Since the gas shortfalls were expected to be much higher, the country would need to enhance its dependence on imported oil, thus increasing pressure on foreign exchange situation.

Last year's oil import bill amounted to about $6.5 billion compared with about $3.5 billion in 2004-05, mainly because of higher international oil prices - a burden expected to be even higher in future as a result of growing Middle East crisis. According to the former minister, the government had planned five major initiatives to meet these energy requirements. They included three gas import pipelines, Gwadar port as energy hub and LNG import. However, four of these measures, including the three import pipeline projects, show no signs of progress for various reasons while concentration on energy facilities in Gwadar would chiefly depend on security situation, besides oil and gas import pipelines.

Industry Snapshot

Pakistan's dependence on gas is significantly higher as compared to other available energy resources as it accounts for almost 50% of total energy supplies. Relying mostly on oil & gas, these two sources of fuels collectively constitute almost 78% of the total energy demand of the country. Though indigenously available gas is sufficient to cater to domestic demand; major portion of oil demand is met through imports. Therefore, natural gas consumption in Pakistan is more a function of supply than demand. Hence, any increased supply through new gas discoveries can be easily distributed and sold, by gas distributing companies (GDC's) due to the strong demand.

Gas Demand

Pakistan's natural gas industry is in a growth stage. Due to the robust growth in demand for gas, Pakistan is likely to face a shortfall in gas supply in the next few years. Pakistan will face a shortage of gas of 1,203mmcfd by 2011. This gap is likely to further widen to11,092mmcfd by 2025. Gas distribution companies are

spending aggressively, expanding their infrastructure on the back of the government's aim to increase local gas production coupled with import of gas. Pakistan has a well-developed and integrated infrastructure of transporting, distribution and utilization of natural gas. With the increased E&P activity in the country along with enhanced production from the existing

gas fields, gas consumption is likely to grow considerably going forward, mainly on the back of strong demand from the power sector which consumes about 36.4% of total gas. According to PPIB, eight new gas/dual fuel power stations will be commissioned by the end of June 2010, which are likely to generate 2,350 MW of electricity.

Gas Consumption

Consumption of gas rose significantly during FY07-08 in different sectors because of increased investment and due to expansion of different sectors coming online. Number of CNG vehicles increased to 1.35 millions in FY08, showing a jump of 35% on Y-O-Y basis, translating into 29,167 vehicles are being converted to CNG every month. Investment of PKR60bn has been made in the CNG sector during July-March 2007-08 against PKR 20bn invested during the same period last year, registering a growth of 200% on Y-O-Y basis. Power sector has emerged as the largest consumer of gas (36.4%) followed by fertilizer (21.6%), industries (19.1%), household (17.8%), commercial (2.7%), cement (1.1%) and transport (1%) in terms of relative share of gas consumption during the last ten years. Local demand for gas is expected to remain robust supported by strong economic activity in the country and a positive substitution effect resulting from higher crude oil prices. The Ministry of Planning estimates gas demand will exceed supply by 3.21m Tons of Oil Equivalent (MTOE) in 2011.Various proposals are under consideration for import of gas such as IPI Pipeline Project, TAPI Pipeline Project and LNG. The expected increase in demand supply gap is likely to be filled through gas imports.

Iran Pakistan India (IPI) Pipeline Project

It has been a decade since talks on the project began in 1993 for the import of gas from Iran through a transnational gas pipeline worth US$ 7.23bn, extending from Iran to Pakistan and India. With the total length of 2,091km divided into two parts, Pakistan will receive 2.1bcfd through IPI Central Route. India will receive its respective share of 3.2bcfd of gas volume at its border through IPI Coastal Route from this high pressure 56 inch diameter pipeline. Inter State Gas System (PVT) LTD a joint venture of SGC and SNGPL is working on laying down the pipeline within Pakistan. Imported gas will be divided among the GDCs according to the demand generated from their respective area of operations. GDCs have to

enter into a purchase agreement with the ISGS. The trilateral talks focused on changes sought by Iran in the gas pricing. Tehran wants the price formula for the gas revised every three years. New Delhi and Islamabad have agreed to Iranian formula of selling natural gas at US$4.93 per mmbtu. Although, all issues have been resolved but still the agreement has not been inked officially at state level and no date has been specified so far for the signing of the agreement.

IPI Gas Pipeline Highlights

RECOMMENDATION

In this age where energy requirement of the economy is nothing but increasing, the energy providers of the country have a very important responsibility on there shoulder which should not be taken lightly. Generally to all energy providers and specifically to SGC we recommend the following distinguish points:

Expansion of transmission network which help the people of rural areas to have the benefit of gas in their locality.

Enhancement of gas supply to power plants, industrial and commercial sectors including supply of gas to previously deprived areas in the domestic sector.

Focus on improved, friendly and efficient customer services.

Latest digital prepaid meters should be installed, with improvement of call centres to include an online customer information system.

Improve in the quality of emergency response system.

Improve the quality of human resource through career planning, training of employees and development of management hierarchy;

The company will be able to enjoy higher net sales and the company's efforts to reduce unaccounted for gas (UFG) will help reduce costs, thereby accentuating profitability.

Community support services and corporate communication initiatives to meet the national and social responsibilities, as a good corporate citizen.

It is hoped that the new tariff regime proposed by OGRA will improve efficiency and enable better utilization of resources.