Trade debt of Sui Southern Gas Company Limited (SSGCL) rose to Rs 43.82 billion at the end of 2009-10. According to Audit Report 2010-11, trade debt was Rs 32.57 billion as on June 30, 2009, which increased to Rs 43.82 billion at the end of 2009-10. The audit observed that SSGCL's reliance on debt was continuously increasing.
The report says that finance cost increased by 13.7 percent from Rs 4.41 billion in the preceding year 2007-08 to Rs 1.02 billion during the year 2008-09. In view of critical cash position, the audit said efforts towards recovery of receivable need to be made to avoid dependence over costly borrowings/swaps.
The company in its reply stated that of the Rs 31.25 billion balance were receivable from KESC, Wapda, Pakistan Steel Mill and others, which stood at Rs 12.56 billion. The company had recovered Rs 10.933 billion (out of Rs 21.280 billion) from KESC, Rs 6.327 billion (out of Rs 8.258 billion) from Wapda and Rs 1.005 billion (out of Rs 1.713 billion) from Pakistan Steel Mills.
The audit said the company need to take more steps to recover its dues within due dates hence the company should reconsider the existing policies/rules to safeguard from default amount. The report further said that the cash and cash equivalent at the end of 2009-10 were in negative (deficit) of Rs 3.1 billion, reason being addition of short-term borrowings. SSGCL needed to take aggressive measures to improve its liquidity and decline of 58 percent in cash and bank balances.
The audit was of the view that the company needs to reflect in its accounts a movement/reconciliation with reference to Guaranteed Rate of Return (GRR) earned by the company and expenses charged there against to reflect a fair view of SSGCL's Profit and Loss for the year.
The report said that further financial statements reflects that sales per customer declined by 3.027 percent, additional sales per km addition in distribution network declined by 44.24 percent, new connections per km addition (distribution) declined by 7.76 percent, and additional sales per new connection declined by 39.55 percent, as compared to last year.
Further, transmission and distribution expenses were increased by Rs 3.24 billion in 2009-10 registering an increase of 51.9 percent in comparison to last year against increments of 6.42 percent in distribution activity during 2009-10. This increase is mainly on account of hike in salaries, wages and benefits of Rs 2.940 billion in 2009-10 as compared to last year.