Sui Northern Gas Pipelines : TRANSMISSION OF 1ST QUARTER (UN-AUDITED) ACCOUNTS FOR THE PERIOD ENDED SEPTEMBER 30, 2021

DIRECTORS' REVIEW

We are pleased to present the un-audited financial statements for the 1st Quarter ended September 30, 2021. During the period under review, your Company has earned profit after tax amounting to Rs 3,032 million against a profit of Rs 3,181 million for the corresponding period. The earnings per share for the period was Rs 4.78 as against earnings per share of Rs. 5.01 for the period ended September 30, 2020.

OGRA in its decision of Estimated Revenue Requirement ('ERR') of the Company for FY 2021-22 dated August 17, 2021, in line with the tariff regime in vogue, has reworked the Rate of Return on Average Net Assets (ROA) for the year 2021-22 and for a further period of two years at 16.60% as compared to the previous ROA rate of 17.43% determined upto 2020-21. Through the same decision, OGRA has revised depreciation rates of various operating assets particularly transmission and distribution network and allied facilities of the Company from present rates of about 6% per annum to the rates ranging from 2.5% to 5% per annum.

Reduction in ROA coupled with certain adjustments which the regulator made in the treatment of certain revenues contributed adversely in the reduction of profit for the period under review.

The Company due to concerted efforts was able to reduce UFG in both percentage terms and volume. The UFG percentage decreased from 10.10% (10,192 MMCF) to 9.63% (8,674 MMCF) and accordingly UFG disallowance decreased from Rs 1,705 million in the corresponding period to Rs 1,292 million for the quarter under review.

Despite all the economic challenges and financial constraints, the Company has not only maintained its pace but is accelerating its pace and is confident of promising results in future. It is considered that the results have been achieved by timely completion of targets of infrastructure development and continuous focus of the Board of Directors on various initiatives taken by the Company. Management and staff of the Company are confident that performance of the Company will further enhance in the years ahead.

PROJECTS

Projects Department of your Company has completed/commissioned 47.73 KMs Transmission Lines with diameters ranging from 8" to 24". In addition to Transmission Lines, 110 KMs of Distribution mains were laid during 1st Quarter ended on September 30, 2021 for improving pressure and supplying gas to new towns which has enhanced customer satisfaction level.

Company is working on the project of developing digital maps of Transmission and Distribution systems through utilization of Geographic Information System (GIS) technology. GIS maps are helping the management and users to visualize the pipeline network and customers related information through interactive Web-Apps and GIS Dashboards. So far, Distribution pipeline network (4"-24" dia) of five cities, whole Transmission pipeline network, all customer locations, customer complaints, leakage detection points and TBS service area boundaries are mapped and available through GIS portal across Company.

ONGOING /FUTURE PROJECTS

Special Economic Zones

The development of Special Economic Zones to support industrialization and business development is the priority of Government of Pakistan. Your Company is actively engaged in taking all necessary measures for smooth and timely supply of natural gas to SEZs.

Sui Northern Gas Pipelines Limited

02

Augmentation of Distribution Network

In order to improve the gas supply and network pressure specially at tail end, your Company has undertaken a comprehensive project for augmentation of gas network at various cities.

BUSINESS DEVELOPMENT

Your Company is engaged in various pipeline construction projects with national and multinational companies. In view of the credentials and performance of the Company, a number of organizations are reaching out to SNGPL to develop business relationship and entrustment of their work. Most of the jobs have been awarded to SNGPL on negotiations or single bid basis which shows trust in the high standards of construction maintained by us. The Company has proved its expertise and established that it is second to none in terms of fulfilling its commitment and work quality. The challenges in the market continue but we look at them as opportunity to make ourselves better. The Company is finalizing plans to diversify its business and wherever possible work on integration of related operational activity .

ACKNOWLEDGEMENTS

The Directors place on record their appreciation for the Government of Pakistan, Ministry of Energy (Petroleum Division), Oil & Gas Regulatory Authority, other Government and Non-Government Institutions related to the Company for their sustained support and the employees of the Company for their dedication and hard work during the period under review to meet the demands of its diversified customer base.

On behalf of the Board

Islamabad.

July 02, 2022

Sui Northern Gas Pipelines Limited

03

Condensed Interim Statement of Financial Position As at September 30, 2021

The annexed Notes from 1 to 32 form an integral part of these condensed interim financial statements.

(Faisal Iqbal)

Chief Financial Officer

Sui Northern Gas Pipelines Limited

04