KARACHI: Sui Southern Gas Company Ltd (SSGC) said on Wednesday it’s going to convert SSGC LPG Ltd, a wholly owned subsidiary, into a public limited firm by offering its shares to the general public.

The government-owned gas distribution company said it’ll initiate the process for the “issuance of 33.3 million shares” of the converted company by means of an initial public offering (IPO) at “any time in (the) future”.

SSGC LPG Ltd is a fully integrated LPG marketing and distribution company, which acquires gas from local producers besides importing it through its terminal at Port Qasim.

Since the LPG subsidiary’s existing paid-up capital consists of 100m shares, the issuance of 33.3m new shares through the IPO will reduce SSGC’s shareholding to about 75pc post-listing.

SSGC LPG Ltd recorded sales of 98,700MT in 2022-23, up 127 per cent from a year ago. Its total terminal volume hit 164,204MT, up 27.3pc year-on-year.

Industry-wide, its share in the terminal business remained 70pc versus 50pc a year ago. Its share in overall LPG sales was 7pc as opposed to 2.8pc in the preceding fiscal year.

In rupee terms, the LPG subsidiary generated revenues of Rs17.8 billion in 2022-23, up 176.2pc. Its net profit for the year clocked in at Rs770m after increasing 24 times from a year ago.

The company’s purchased volume of LPG in 2022-23 consisted of “more than 92pc of imported LPG”. The firm’s terminal has 3.5km pipelines and a jetty capable of handling vessels up to 15,000 deadweight tonnage (DWT) with a bulk storage capacity of 6,500MT. Its plant at Port Qasim has an automated LPG cylinder filling facility.

According to the most recent financial accounts of SSGC, the parent company maintains a long-term investment of Rs1.25bn in its LPG subsidiary along with a long-term loan of Rs700m and a deferred mark-up on loan of Rs759m.

The announcement of the IPO by the company’s parent firm comes at a time when new listings on the Pakistan Stock Exchange (PSX) have become few and far between. The PSX had only one IPO in 2023 in which only Rs435m was raised. The amount raised was the lowest in the past decade and a half, according to data compiled by Topline Securities.

Published in Dawn, December 7th, 2023