Ssgc_Report

ACKNOWLEDGEMENT All the praises are for the almighty Allah, who bestowed me with his blessings, the ability and potential to complete my four weeks internship program. Words are very few to express enormous humble obligations to my affectionate Parents for their prayers and strong determination for enabling me to achieve this job. The inspiring guidance, remarkable suggestions, constant encouragement, keen interest, and friendly discussion throughout my internship period enabled me to complete this report efficiently. I offer my heartiest tribute and cordial gratitude to present my thanks to Mr. Asad (L/O section), Mr. Gulzar (L/O section), Mr. Sohail (Budget section),Mr. Iftikhar (budget section), Mr. Iqbal Batvia (Bid Bond Section),Mr. Amir (Treasury Function), Mr muneeruddin(Treasury function) who had been a source of constant support and inspiring guidance throughout my internship period. I am also thankful to Mr. Shuja who was source of guidance and his inspiration led me to learn and nourish my skills in different sections of the finance department. TABLE OF CONTENTS |S.NO |TOPICS |PG.NO | |1 |About the Company |3-5 | |2 |Finance department |6 | |3 |Areas of working |7 | |4 |Billing section |8-10 | |5 |Cash and Bank section |11-13 | |5 |Cost and Budget section |14-16 | |6 |OGRA |16-17 | |7 |Bid Bond section |18-20 | |8 |Recommendations |21 | ABOUT THE COMPANY SNAPSHOT OF SSGC Sui Southern Gas Company Limited (SGGC) is engaged in the transmission and distribution of natural gas. The company is also engaged in the manufacturing and selling of gas meters. SGGC is a provider of high pressure transmission and low pressure distribution systems. The company owns and operates a network of high-pressure gas pipelines to supply gas. The gas is supplied to customers belonging to a franchise area covering more than 1,200 towns in the Sindh and southern Pakistan. The company principally operates in Pakistan. SSGC transmission system extends from Sui in Baluchistan to Karachi in Sindh comprising over 3,200 km of high pressure pipeline ranging from 12 - 24" in diameter. The distribution activities covering over 1200 towns in the Sindh and Baluchistan are organized through its regional offices. An average of about 357,129 million cubic feet gas was sold in 2006-2007 to over 1.9 million industrial, commercial and domestic consumers in these regions through a distribution network of over 29,832 km. The company also owns and operates the only gas meter manufacturing plant in the country, having an annual production capacity of over 550,150meters The company is managed by an autonomous board of directors for policy guidelines and overall control. CORE BUSINESS OF SSGC PRIMARY ACTIVITY The core activity in which SSGC is involved is transmission and distribution of gas in Sindh and Baluchistan. SECONDARY ACTIVITIES Certain activities related to the gas business including manufacturing and sale of gas meters and construction contracts for lying of pipelines are also performed by the company. • Purification of Natural gas from Sui Fields • Transmission of Natural Gas from Pirkoh, Sari Hundi, Badin, KandhKot, Mari, Daru and Kadanwari gas fields • Distribution of Gas in Sindh and Baluchistan provinces • Manufacturing and sale of gas meters • Construction contracts of laying pipelines COMPANY’S VISION “To be a model utility providing quality service by maintaining a high level of ethical and professional standards and through optimum use of resources“ COMPANY’S MISSION “To meet energy requirements of customers through reliable, environment-friendly, and sustainable supply of natural gas, while conducting company business professionally, efficiently, ethically and with responsibility to all our stakeholders, community and the nation.” FINANCE DEPARTMENT Finance is the lifeblood of any organization and same is the case with SSGC’s finance department. Under the umbrella of finance Department we can find various sections which are linked to each other. 1) FINANCE • Payroll • Insurance • Gas Sales • Billing • Bid bond • Pre audit • Provident fund 2) TREASURY • Cash & Bank • Imprest (Petty cash) • Gas purchase • Import • Revenue collection 3) ACCOUNTS • Inventory • Cost • Budget • Fixed assets • MIS AREAS OF WORKING The experience was more than what I had expected. The company provided me with an opportunity to work in areas of my keen interest and utmost importance. It was through these times that I got a multidimensional experience by working under four different sections of finance department. 1) Billing section(L/O and N.L/O) 2) Cost and Budget section 3) Bid Bond 4) Cash & Bank BILLING SECTION BACKGROUND In order to keep in consideration the company’s policy and ensure timely payments of all invoices the billing section of the company is formulated. To approve vouchers with in limit and to send reports to management on monthly basis on regarding details of invoices received and processed during the month and outstanding vouchers. The maintenance of the record of retention money deducted from invoices of suppliers and follow of long outstanding advances on monthly basis are all the functions performed by billing section of finance department. [pic] NON LOCAL ORDER This deals with emergency payments, quick payments and very few payments against agreements and tenders. LOCAL ORDER Payments are made against tender and proper agreements in local order section. WHAT I LEARNED WHILE WORKING FOR 1 WEEK UNDER THIS SECTION When Mr. Sajjad receives different invoices so he first stamps the receiving date and then distributes those accordingly means those pertaining to L/O section are given to the people responsible for that and those of N.L/O section are given to employees responsible for that. Mr. Gulzar in the L/O section is responsible for making batches and punching the invoices. The task of making batches is made simpler by use of ORACLE. The function of ERP (Enterprise resource planning) is made easier by the implementation of the new technology due to which not only time is saved but error less work is ensured. This process is moved further as the work passes onto Mr. Razzaq and then after small process which includes printing of yellow vouchers and calculation of Late delivery, checking the calculations of G.S.T and S.E.D passes on to the further process of making cheque. When one is working under L/O and N.L/O section so he/she can have a know how of the following documents as these are required in both the sections. 1) Bank payment voucher 2) Checklist 3) Local purchase order 4) Cash memo 5) Comparative statement 6) Work order 7) Income tax invoice 8) Evaluation report 9) Approval 10) Receiving statement In short, the bill payment section of finance department is required to process the bills of service, contracts, utilities, medical, supplies, and other non local order bills received from various departments including ditching contractors, road cutting charges, civil works etc. The section also processes the medical bills of headquarters. The section is responsible to ensure that all transactions are with in the authorized limits and adequately approved. Similarly the payments are made only for the authorized acquisition of the services, contracts, works orders etc and approved by competent authorities. CASH AND BANK SECTION CASH SECTION The cash section deals in payments to different parties on daily basis. This section is responsible for the collection and disbursements in cash mode. It is involve in the processing of cash receipts from contractor, employee and executives and payments to employees/executives and suppliers against cash payments vouchers. The record is kept of all receipts and payments on daily basis in newly implemented Oracles Accounts Payable and account receivable modules. It has to pay up to certain amount to contractors and also to staff members for different purposes. That’s why it is involved in drawing cash from strong room up to a particular limit being approved by head of department. One of the person responsible for strong room is Mr. Muneeruddin. TYPES OF PAYMENT MADE BY THE SECTION The nature of disbursements, which the cash section is involved on daily basis, includes number of categories (like advances to Staff, material/stationery purchase, medical bills & etc). They have to make payments regularly to different parties to which they deal with. Usually payments of every sort having amount less than Rs. 5000 are made through cash payment voucher. BANK SECTION All payments made through cheques, pay orders and demand drafts are a part of bank section. SSGC has a number of disbursement accounts and the bank account is selected according to the payment amount required. Oracle AP &, AR modules are used to keeps an up to date record of all payments and receipts. The department also keeps a check of each bank balance so that no account would have a negative balance. In case some account has less than the minimum amount, funds are transferred from the ones that have excess funds means the accounts are reappropriated. An indispensable role is played in the maintenance of strong room, disbursement bank accounts reconciliation, depositing of cheques, pay orders in SSGC A/Cs and, orderings Banks stationeries of bank rolls, cheque books. It facilitates internal and external audits and keeps a record of all bank receipts, bank payments and returned cheques. It generates MIS reports when required and orders cash from bank for daily uses. An effective management of fund is done under the supervision of this department. TYPES OF PAYMENT MADE BY THE SECTION Usually payments in this section are made for: • Employee salaries • Payment to Suppliers and contractors for material purchased • Payments for imports • Purchase of gas. • Funds transfer WHAT I LEARNED WHILE WORKING FOR 1 WEEK UNDER THIS SECTION As soon as the bank section, indeed Mr. Amir receives the vouchers from the concerned departments, he records the data, by making an entry in he excel sheet. In which the receiving date, amount and the name of the party is recorded so that any further query by the party can be traced back from the record. Along with the vouchers are some supporting documents which shows the reason of payment. These supporting documents are verified. After the bank section ensures that the payment voucher has been validated and supporting documents are attached, the process of making cheques starts. To save time the company had made special arrangements with some banks to get cheque rolls printed rather for cheque books. The cheque rolls are set into the printer and series wise all the cheques are printed saving time and producing errorless work. This facility is provided by the following bank: 1) Bank Alfalah Ltd 2) Muslim Commercial Bank 3) Faysal bank Ltd 4) Habib bank Ltd 5) Union bank. The next task after cheque making is the signing of the same from by the authorized signatories (two signatures are mandatory or compulsory. One is from finance department and the other is from other than finance.), the cheques are disbursed to the concerned parties through courier or the party sometimes send his representatives for collection. COST AND BUDGET SECTION One of the core functions of finance department is carried out under cost and budget section. This section carries utmost importance because planning and cost both are the backbone of every successful organization. The primary responsibilities of this section is 1) Budget planning 2) Cost monitoring The two main schedules pertaining to this section are: 1) Transmission & Distribution Cost(operating expenses) 2) Administrative, General and Selling Expenses BUDGET Plan of action that forecasts future transactions, activities and events financial and non financial. The making of budget allows an organization to establish the following: 1) The minimum desired level of revenue, or target level of revenues. 2) The corresponding spending for the creation of the desired revenue. There are 2 kinds of budgets prepared in SSGC. 1) Revenue budget 2) Capital budget Revenue Budget: Expenditure on repair and maintenance of fixed assets or restore its original assessed standard of performance is normal revenue expenditure and should not become part of capital budget. Capital Budget: Capital expenditures are those that result in creation and betterment in the life or productivity of assets, the future economic benefit of such assets r expected to continue 4 more than one fiscal year. WHAT I LEARNED WHILE WORKING FOR 1 WEEK UNDER THIS SECTION At first, the budget proposal of each department should be reviewed by departmental/ divisional heads and after having been finalized, these should be signed and submitted to the finance department. Now it’s the responsibility of finance department to compile and analyze the preliminary estimates and discuss if required with the concerned departmental/divisional heads, after completion the same will be submitted to the management for onward recommendation to the board approval. SGM’S of different divisional heads will be called to Karachi HO and they will cut and remove items in budget which are not required only in their area. After this allocation of function code to budget takes place. The problem arises when some departments spend their budgets before the specified period. In order to solve this issue, the department sends the request for additional budget or re-appropriation. The cost and Budget section as suitable a lot additional budget or re appropriate budget. Then the proposed budget is made department wise, company wise and account wise. THE BUDGET PHASE Budget is a financial statement which is prepared before the starting of the financial year containing the plans and policies to be carried out during the period. The budget section of finance department prepares capital expenditure budget (capex) annually for all the departments of SSGCL. All the departments are instructed to make the proposed budget for themselves for their departments, before the budget section starts to make it. After receiving the proposed budgets from the departments, the budget section examines it and discusses all particulars with the related head of department & staff giving special consideration to the justification of fixed asset requirement and funds available in the company. The budget is then send to the GM and SGM 4 its approval or changes & finally to the MD for the approval. When the budgets of all the departments have been finalized, it is reviewed by the finance committee. Board of directors grants approval for the agenda after which the budget is authorized to be followed. Each department is then informed through interdepartmental note along with the copy of their budget. Keeping aside all these issues, the finance department has to follow the budget as proposed by BOD and then the budget is released in four quarters but the BOD has to follow OGRA requirements and without their approval they can not approve the budget. OGRA OGRA has been set up under the oil and gas regulatory authority ordinance dated 28th march 2002 to foster competition, increase private investment and ownership in the midstream and downstream petroleum industry, protect the public interest while respecting individual rights and provide effective and efficient regulations, OGRA works under ministry of petroleum ,as OGRA gives advises to ministry of petroleum for setting well head and sale prices for end consumers and producers of natural gas and issue it when approved from ministry. FUNCTIONS OF OGRA 1) According to the rules, grant licenses, modify, amend, extend, suspend, review, cancel and reissue revolve or terminate any license 2) Prescribe a uniform form of accounting practices by licensee 3) Promote and observe the practices for efficiency 4) Promote competition 5) Enforce compliance by licensee 6) Resolve complains 7) Prescribe fines if rules are not obeyed 8) Protect interest of stake holders. 9) Administer or establish price for those categories of products for which federal government establishes prices. 10) In consultation with federal government determine a price for each licensee a reasonable rate which may be earned by such license. 11) Oversee capital expenditure budget made by licensee of natural gas. 12) Determine well head gas prices for the producers of natural gas. 13) Impose excise duty, taxes, and other forms of charges. 14) Licensee for natural gas means licensee for transmission, distribution and sale of natural gas to retail consumers. 15) To check and ensure that the pressures in transmission and distribution pipelines are according to required pressure that is less than 300psig 16) OGRA is an independent authority; it can sue and be sued, acquire and hold. 17) Responsible for issuing sale price and minimum charges for SSGCL and SNGPL to charge from their customers. BID BOND SECTION The section responsible for developing relationship between SSGCL and its bidder or suppliers. Updation of all records regarding the earnest money and performance bond given by Material Management Section and to retain and release all the Pay Orders and Bank Guarantees according to the conditions are among its primary responsibilities. FLOW CHART OF BID Retaining the bid bond from the supplier Releasing the bid bond to the supplier Retaining the performance bond from the selected supplier Releasing the bid bond to the supplier after completion of the project Issue the check for the payment of the cheque FUNCTIONING OF BID BOND SECTION Bid bond The earnest money paid by the supplier to SSGC at the time of submission of any bid against a tender issued by the company. Retaining of bid bond At the time when a company issues a tender for the supply of any inventory, various interested suppliers acquire this legal document to submit their bids against the issued tender. The amount of bid bond is 2% of the total amount of tender which is obligatory to submit to guarantee the full and due performance of the contract. Bid bonds are sent to this bid bond section through the material management department. This earnest money can be submitted in form of either pay order or bank guarantee. Encashment of bid bond If the bid bonds are in the form of pay order and is more than 25000 so it is encashed but pay orders less than 25000 are keep intact but if the bid bond amount is in the form of bank guarantee so no matter what the amount is but it is kept save and not encashed. Release of bid bond On the basis of lowest rates and past performance three lowest bidders are selected and among them only one is selected later. After the selection,all other bid bonds are released. Performance bond The amount of money paid by the supplier who had been selected as a successful bidder. This amount is retained by the company as a security deposit until the work is completed. It can be in the shape of either bank guarantee or pay order. Retaining of performance bond The successful selected bidder is bound to pay 10% of total amount of tender in the form of performance bond. This is withheld by the company till the completion of work. Release of performance bond As the work is completed by the supplier, the company inspects both the quantity and quality of work done and when the company is fully satisfied with the work, instructions are given to release the performance bond. AN IMPORTANT CONSIDERATION IF THE PERFORMANCE BOND IS IN THE SHAPE OF BANK GUARANTEE If the supplier gives company banks guarantee so the bid bond section has to keep an eye on it because usually a project lasts for more than a year and on the contrary duration for bank guarantee to expire is 6 months. Therefore a week before the expiry, bid bond section sends a letter to the supplier to extend the bank guarantee or encash it. RECOMMENDATIONS On the basis of my analysis and as recommended by Mr. Shuja I would like to share some of my suggestion, which if looked upon seriously can improve the functioning, operations and promote sense of belongingness for the company employees. 1) Internees at SSGC are not hired on the basis of their merit rather on their strong references or some political background, which is an open discrimination. 2) There is a need to improve morale among employees, since I found absence of this element while interacting among different people of the organization and the core reason I found behind this was the factor that people at SSGC are aware of the fact hat no matter how hard they try or how loyal to the company they are, but until and unless they have a strong reference they can not be promoted. 3) The young employees do not foresee a bright future in this organization therefore they have a feeling of disowning this organization because this company do not promises career growth on the basis of performance and hard work. 4) Absence of a separate prayer room for girls. 5) Internees at SSGC should be rotated on weekly basis in a systematic way so that they can find a proper linkage between the sections they are sent form time to time. [pic] ----------------------- Non Local Order Local Order Bill Payment