Performance Evaluation of Titas Gas Transmission and Distribution Company Limited.
Subject: Economics, Finance

EXECUTIVE SUMMARY

An efficient all round performance especially financial performance is important for any business organization. It is rather the stake of survival in the long run. In essence, all the activities of the organization are directed for that purpose. An organization may have excellent marketing, efficient human resources, but at the end of the day, it is the financial bottom line that will speak about the overall efficiency. Here an effort has been made to evaluate performance of Titas Gas T & D Co. Ltd. for the last five years . It is a vast topic but I decided to work in this important and interesting area. Since the inception of the organization, Titas Gas T & D Co. Ltd. has achieved tremendous success in its operation of business. The study also shows the company’s increasing profitability and success in other area.

During 2009-10 Market share of four company under Petrobangla the Titas Gas Transmission and Distribution Company Ltd.( TGTDCL) is in  the best position. That is the position of (TGTDCL) is  on the basis of Sales 74.42%, Revenue 72.64%, Customer connection 80.44%, Pipeline construction 53.44%. System loss decreasing from 6.47% to 0.81% in the last four financial years (2005-06 to 2008-09) and in the last financial year 2009-10 system is gain 2.14%. The analysis of last five years data shows that the company is in a trend of reducing it debt portion relative to its equity (the debt-equity ratio in 2006 is 44 : 56 whereas in 2010 is 10 : 90). The debt-equity ratio of last five years (2006-10) indicates a decrease of debt related to equity. Sales and net profit after tax is increasing trend in the last five financial years which is a good sign for the company.

Origin of Titas Gas T & D Co Ltd.

Titas Gas T & D Co. Ltd. (TGTDCL) was formed in November 1964 as a joint Stock Company (Under the Company’s Act 1913) of the central Government of Pakistan on the one hand and Pakistan Shell Oil Company on the other, with a view to transmitting and distributing natural gas to the Dhaka city the then provincial capital of Pakistan from the discovered gas field called “Titas” located on the bank of the River Titas, within the close vicinity of the present Brahmanbaria district of Bangladesh. The authorized capital was Taka 17.8 million only, divided into 17800 shares of Taka 10.00 each. Ninety percent of the shares were subscribed by the then central Government of Pakistan and remaining ten percent by the Shell Oil Company.

In December 1971, after nine months of liberation war, Bangladesh emerged in the world map as a new independent state with the same geographical boundary of the then East Pakistan. Plunged into a state of total economic collapse following the war of liberation, vigorous activities were immediately started at all levels to rebuild the country. Certain national priorities were set by the then Govt. and significant changes were brought about in the management of development activities. A no. of Sectors or Corporations was formed and each of them was entrusted with the operation and management of the units under it. In March 26, 1972 Govt. has formed “Bangladesh Oil, Gas & Mineral Corporation (BOGMC) under the Presidential Executive Order and Titas Gas T & D Co. Ltd. has become an enterprise of BOGMC. Titas Gas T & D Co. Ltd., which was earlier established as a joint stock company with 90% share capital of the Govt. of Pakistan naturally, vested to the Govt. of the People’s Republic of Bangladesh and the rest 10% share capital of Pakistan Shell Oil Company was transferred to the newly formed Bangladesh Shell Oil Company. During 1975, under the nationalization program, Govt. has brought back 10% share of Shell Oil Co. and Titas Gas T & D Co. Ltd. has become a 100% Government owned Company. Meanwhile, during August 1974, Bangladesh Oil & Gas Corporation/Petrobangla and during October 1975, Ministry of Energy & Mineral Resources had been formed. TGTDCL has been placed under the administrative control of the newly formed ministry along with Petrobangla and its subsidiary Companies.

Historical Background of Titas Gas T &D Co. Ltd.

The history of the use of Natural Gas as a source of energy and feed-stock in Bangladesh dates back to early sixty’s. Haripur Gas Field, discovered in Sylhet district in the year 1955, cameinto commercial production in 1961 with the supply of gas to Natural Gas Fertilizer Factory (NGFL) at Fenchuganj by 28 miles 8” DN pipeline. The Chatak Gas Field, discovered in 1959 was brought into commercial production with commencement of gas supply to Chatak Cement Factory in 1960 by 12 miles long transmission pipeline.

Titas Gas T & D Co. Ltd. (TGTDCL) was formed in November 1964 as a joint Stock Company (Under the Company’s Act 1913) of the central Government of Pakistan on the one hand and Pakistan Shell Oil Company on the other, with a view to transmitting and distributing natural gas to the Dhaka city the then provincial capital of Pakistan from the discovered gas field called “Titas” located on the bank of the River Titas, within the close vicinity of the present Brahmanbaria district of Bangladesh. The authorized capital was Taka 17.8 million only, divided into 17800 shares of Taka 10.00 each. Ninety percent of the shares were subscribed by the then central Government of Pakistan and remaining ten percent by the Shell Oil Company.

The basic objective of the Company was to construct, own and operate natural gas transmission & distribution facilities in the mid-eastern region of Bangladesh i.e. Comilla, Mymensingh and Dhaka district with the right of purchasing, transmission, distribution, sales and disposal of natural gas within the jurisdiction of greater districts before creation of new districts.

In December 1971, after nine months of liberation war, Bangladesh emerged in the world map as a new independent state with the same geographical boundary of the then East Pakistan. Plunged into a state of total economic collapse following the war of liberation, vigorous activities were immediately started at all levels to rebuild the country. Certain national priorities were set by the then Govt. and significant changes were brought about in the management of development activities. A no. of Sector or Corporations was formed and each of them was entrusted with the operation and management of the units under it. In March 26, 1972 Govt. has formed “Bangladesh Oil, Gas & Mineral Corporation (BOGMC) under the Presidential Executive Order and Titas Gas T&D Co. Ltd. has become an enterprise of BOGMC. Titas Gas T&D Co. Ltd. which was earlier established as a joint stock company with 90% share capital of the Govt. of Pakistan naturally vested to the Govt. of the People’s Republic of Bangladesh and the rest 10% share capital of Pakistan Shell Oil Company was transferred to the newly formed Bangladesh Shell Oil Company. During 1975, under the nationalization program, Govt. has brought back 10% share of Shell Oil Co. and Titas Gas T&D Co. Ltd. has become a 100% Government owned Company. Meanwhile, during August1974, Bangladesh Oil & Gas Corporation/Petrobangla and during October 1975, Ministry of Energy & Mineral Resources had been formed. TGTDCL has been placed under the administrative control of the newly formed ministry along with Petrobangla and its subsidiary Companies.

The gas supply area of the Company has been extended to new areas of Greater Dhaka, Greater Mymensingh and Brahmanbaria which includes Dhaka Metropolitan city & suburbs, Tongi, Joydevpur, Gazipur, Mirzapur, Tangail, Savar, Dhamrai, Manikaganj, Aricha, Narayanganj, Sonargaon, Rupganj, Araihazar, Jinjira, Keraniganj, Munshiganj, Mirkadim, Brahmanbaria, Bhairab Bazar, Ashuganj, Narsingdi, Ghorashal, Madhabdi, Sreepur, Mymensingh, Netrokona, Jamalpur, Sherpur, Kishoreganj, Tarakandi, Bhaluka, Trishal & Gaffergaon. Presently, Titas system is receiving gas from Titas, Habiganj, Narsingdi & Bakhrabad Gas Fields under Bangladesh Gas Fields Co. Ltd. and from Rashidpur, Kailashtila, Beanibazar Gas Fields under Sylhet Gas Fields Co. Ltd. and Jalalabad Gas Field of Oxydental/Unicol.

 The Company own and operate 735 Km of Transmission pipelines (6”DN thru’ 24” DN) and 7585 Km of Distribution & Servicelines (3/4”DNthru’12”DN). Presently, in Titas System the Daily average offtake of gas is 800 Million Cubic Feet (MMCF) and the yearly Revenue Earnings is Tk. 24000 million. The Company has so far given gas connection to around 9,73,419 customers (17 Power stations, 4 Fertilizer factories, 2953 Industrial units, 7832 Commercial units, 152 Seasonal units, 55 CNG and 968016 Domestic customers). TGTDCL alone is saving a sum of over Tk.22000.00 Million annually on fuel import bill of the country other than its payment to National Exchequer in the form of Excise Duty, CD/VAT, Corporate Tax and Dividend. At Present, there are 2642 Employees (660 Officers and 1982 Staffs) serving in the Company, among which 205 are foreign trained Graduate Engineers, Economists and Accountants.

Among the four gas marketing Companies the market share of business of TGTDCL is 70 % of which Power, Fertilizer, Industrial, Commercial, Domestic and Seasonal are 48.20 %, 18.97%,20.28%,1.04%,11.56% and 0.13% respectively.

The company operates from its own office complex at Titas Bhaban, Kawranbazar C/A, that is in the centrally located business area of Dhaka Metropolitan City. The office is fully furnished with all modern office facilities and logistics. The office is also equipped with security system with modern digital telephone, Fax, SCADA as well as electronic mail.

With the increased shape the authorized and paid-up capital of the Company has increased to Tk. 2000 million and 1507.30 million. “Titas Gas” is now a household name for its uses in the houses, Power plants, Industries, hotels and restaurants. And as raw materials to the Fertilizer factories, it is helping attain autarky in food and other agricultural products.

TGTDCL has, by its own right and merit, earned the reputation as well the capacity to undertake any major project in Gas Engineering, Pipeline Construction, Operation and Maintenance thereof and also in the marketing of gas in the country.

Board of Directors

Chairman

Mr. Mohammad Majbahuddin

Secretary

Energy and Mineral Resources Division

Directors

Mr. K H Masud Siddiqui

Secretary

Ministry of Industries

Mr. Md. Najrul Islam Khan

Private Secretary -1

(Secretary Incharge) to Hon’able  Prime Minister

Mr. Dr. Md. Hussain Monsur

Chairman

Petrobangla

Mr. A S M Alamgir kabir

Chairman

BPDB

Major (Retd.) Md. Muqtadir Ali

Ex – Chairman

Petrobangla

Engr. Md. Abdul Aziz Khan

Managing Director

Titas Gas T & D Co. Ltd.

Mr. Akhter Hossain

Mr. Abul Kashem Khan

President

Dhaka Chamber of Commerce & Industries

Objectives of the Company

The main objective of TGTDCL is to supply gas uninterruptedly to Dhaka city and the areas covered by it. The company wants to ensure proper utilization of natural gas. Through its business activities the company is contributing to the Government exchequer.

Welfare Activities: The Company undertakes various motivational activities to improve human relationship, mutual understanding, interpersonal relationship and loyalty among the officials and employees. The Company extends its welfare activities to the following fields:

  • Education : Titas Gas Adarsha Biddyaloy at Demra runs under the management of the company.
  • Sports : Titas Club regularly takes part in Bangladesh Volley Ball Federation and in the Premier Volley Ball League in Dhaka Metropolis.
  • Others : The Company arranges various social, cultural and religious functions every year.

Annual Development Programme:

The company has expanded its network through implementation of new pipeline projects under the Annual Development Programme. During the year 2009-2010 an amount of Tk. 33.02 crore has been spent from company’s own source for network expansion and implementation of development projects including service connections and pipeline modification/ upgradation activities. In FY 2009-10 the length of pipeline under TGTDCL stood at 12,037.26 km including newly constructed  541.27 km pipeline over the year. A statistics of Company’s pipeline status over last five years is furnished below:

System Loss Reduction Programme :

The Company has been implementing different action plans to reduce overall system loss/unaccounted for gas. Actions includes monitoring area wise gas input-output and thereby fixing responsibilities for system loss, RMS sealing, calibration and replacement of old meters, intensive vigilance, disconnection of unauthorized gas use by task force, installation of internal pipeline of industrial , commercial customers etc above ground level. A programmed is being implemented by assigning officers to collect meter readings including visit to customer premises. Meter sealing and testing programmed are being implemented in time. The premises of the industrial & disconnected customers are being inspected by special teams. In the financial year under review, due to sincere efforts put in place by Titas Management under the direction of Titas Board, Petrobangla and Ministry, positive results have been achieved in system loss reduction.  The Company has achieved 2.14% system gain in 2009-10 compared to 0.81% system loss.  In FY 2008-09.As a result, Company has earned additional revenue of Tk.133.66 crores. In addition to all these actions court cases are also being per sued vigorously for speedy disposal. The continuous downward trend of system loss reflects the success of various programmed undertaken by the Company. The information related to the System loss reduction of the Company from FY 2005-06 to FY 2009-10 FY is presented below:

Financial YearMMCMSystem Loss/(Gain)%
2005-06704.206.47
2006-07621.665.26
2007-08430.093.39
2008-09109.360.81
2009-10(304.55)(2.14)

System Loss Reduction Project:

The system loss at Narayanganj Area was about 22% during 2006. With a view to reduce system loss, the company has undertaken a Project under the name, “System Loss Reduction of TGTDCL” as Part-D.2 component of Gas Transmission & Development Project (GTDP) financed by ADB and GOB. The DPP of the project was approved on August 28, 2006. As per approved DPP, the total cost of the project is Tk.2, 256.75 lacs (Tk. 1399.00 lacs in foreign currency and Tk. 875.75 lacs in local currency). The project implementation period is from July 2006 to June 2010, which further extended to june 2011 on approval of the Government. The primary objective of the project is to reduce the system loss below 2% within the year 2010-11, by improving the existing operation and gas measurement of two isolated distribution areas of Titas Franchise Area, namely, Location-1 (Narayanganj, Fatulla, Munshiganj) and Location-2 (Sonargaon). Scope of the project is as follows:

Procurement and installation of 604 nos. of Turbine and Rotary Meters equipped with EVC (Electronic Volume Corrector) for the improvement of area wise TBS/DRS inputs and gas measurement facilities at customer ends;

 Procurement of 5 nos. of Mobile Meter Calibration Units for onsite meter calibration; and Appointment of international and National Consultants for operational and management aspects of SLRP.

 604 nos. of Turbine and Rotary Meters equipped with EVC (Electronic Volume Corrector) and 5 nos.  Mobile Onsite Meter Calibration Units have already been purchased from the lowest evaluated responsive bidder M/s. Actaris Singapore Pte. Ltd, Singapore. An agreement was singned on May 26,2010 between M/s Fichtner GmbH & Co. KG. Germany and Titas Gas  to  develop the  existing operational & management capacity of the company and  foreign consultants has already been started working .

To impart Local training, under the project, is now under process. Besides, appointment of local contactor firm through inviting tender for installing purchased meters at customer’s premises is now under process.

Supply Efficiency Improvement Project:

Energy efficiency is a vital issue for gas conservation. Most of the industrial, captive, commercial and domestic customers are not quite aware of the efficient utilization of gas. Domestic customers of TGTDCL use unmetered gas. They pay bill on a flat rate basis, irrespective of the volume of gas consumed. Some unscrupulous customers also indulge in gas pilferage, using gas in unauthorized appliances. This is one of the factors which contribute to the wastage of gas resulting in system loss of this non-renewable resource. Inefficient utilization of natural gas in different boilers, generators, re-rolling furnaces, crucible furnaces and many other gas consuming equipments and inefficient gas burners cause loss of a huge amount of gas, posing a visible threat to national energy security. Inefficient gas use is an inevitable outcome of incomplete combustion of gas. Thus unburnt carbon and carbon monoxide produced this way degrade our environment.

With the financial assistance from Asian Development Bank (ADB) and Bangladesh Government a project titled ‘Supply Efficiency Improvements of TGTDCL’ has been taken in hand. The main goal and objective of the project is to improve supply efficiency in the distribution system of Titas Gas Transmission & Distribution Company Limited (TGTDCL). This improvement in management efficiency, gas conservation and positive environment impact.

Under this project following activities will be undertaken:

Design, supply,installation, Testing & Commissioning of 8600 nos.Domestic/Commercial Pre-Paid Gas  Meters with necessary Hardware (IcI smart Card,Card reader/writer and Gas selling Management System-GSMS) and Software (SMS and Vending Software)on Turn Key Basis;Design, supply,installation, Testing & Commissioning of 680 nos. Remote Metering System on Turn-key Basis including Procurement and Installation of Turbine meters Equipped with EVC.Consultancy  services in Bid preparation, Bid evaluation, Construction supervision related to Turn-key contracts and to develop a ‘ Portfolio of projects’ related to Energy Efficiency  Improvement.

DPP of the project was approved by the ECNEC on December 22, 2009.  The  total estimated cost of the project is Tk.5,552.09 lac, including a foreign currency component of Tk.3,470.23 lac. The project will be implemented from January 2010 to October 2012.

It is noted that, the Board of Directors of Asian Development Bank (ADB) approved Bangladesh Natural Gas Access Improvements Project on March 26, 2010 at its meeting. Final Loan agreement was signed between ADB and GOB on June 30, 2010 after completion of necessary formalities. At the same date a project agreement was also signed between Titas Gas T & D Company Ltd. ( Part-D Component Executing & Implementing  Agency ) and ADB.

Appointment of foreign consultant is now under process.

Network Expansion and Modification:

About 37.73 km pipeline of different diameters have been laid in different areas of TFA from company’s own fund.

System Development:

Following programmes have been undertaken and implemented/under implementation to increase  gas supply to Dhaka city and  adjoining areas:

 12” DN x 140 PSIG x 7.5 km parallel/loop pipeline from panchaboti DRS to Mokterpur industrial area has been constructed. As a result, the gas flow capacity of the existing gas pipeline network of Moktarpur Industrial Area, Munshigonj District Town and Tungi Bari Upazilla  has been increased significantly.

Construction of 6″ DN x 50 PSIG x 300 Meter link line and Regulating Station at Bhanga Bari, Keranigonj area has been completed. This resulted increase of gas supply in the existing gas pipeline network of Kalandi, Hazratnagar & Kalatia  Union under Keranigonj Upazilla;

 Construction of  10″ DN x 140 PSIG x 3.7 km pipeline from Mirpur DOHS DRS to Mirpur Circle-10 has been completed. As a result gas supply in the existing gas pipeline network of Mirpur-10,11,12 and its adjoining  areas will be increased.

Construction of  8″ DN x 140 PSIG x 2.4 km link line at Surabari, Narsighapur and  Kashimpur aea  helps in increasing gas supply at these area .

 Linking of 12″ DN x 140 PSIG line & 16″ DN x 140 PSIG main distribution line built under Dhaka Clean Fuel (DCF) Project from City Gate Station (CGS) of GTCL at Amin Bazar to adjacent DRS of TGTDCL. As a result, the gas flow capacity of the existing gas pipeline network of Dhaka Metropolitan Area  has been increased  due to elevated inlet pressure at the DRSs’.

After completion of construction of  12″ DN x 140 PSIG x 7.5 Km parallel/loop line from Panchabati DRS to Moktarpur Valve Station (Except River Crossing), the gas supply will be increased to the existing gas pipeline network of Panchabati & Moktarpur Industrial Area, Munshigonj Sadar and Tungi Bari Upazilla  .

Purbachal New Town Gas Distribution Project:

A project has been undertaken to supply gas to Purbachal New Town, now being built over 6150 acres of land by RAJUK. Under this project 22.0 km transmission pipeline and 416 km distribution pipeline network will be constructed along with gas stations. Estimated cost for the project is TK. 297.19 crores, which will be borne by RAJUK.  Company has taken preliminary works for acquisition and requisition of land after receiving advance payment of Tk 3.50 crores from RAJUK.

 Gas supply to the Power Stations:

Gas  has been supplied to Siddhirganj 120 MW 1st unit and Siddhirganj 120 MW 2nd  unit in Januray 2010 and May 2010 respectively. Besides, Gas supply has also been started to Ashugonj 55 MW Quick Rental Power Plant.

Project Implemented by Civil Engineering Department:

The Civil Engineering Department (CED) has implemented different civil works within TFA at a cost of Tk. 2.70 crores , of which,  extension of Zinziar Office building, construction of security station, walk-way at Demra CGS and Store Area  work   was a  major one. In addition, construction of soil retention wall, land development, construction of boundary wall etc. has been completed.

Installation of Prototype Pre-paid Gas Meter (Dhanmondi Area) Pilot Project :

As a part of building Digital Bangladesh and from the directive of  Power, Energy & Mineral Resources Ministry to ensure the optimum use of natural gas a   examine feasibility of introducing metering for domestic customers, a proposal to undertake a pilot project for installation of Pre-paid Gas Meter, made under the supervision of Institute of Information and Communication Technology (IICT) of BUET, has been approved at 585th Meeting of Titas Board. Following this, installation of Prototype Pre-paid Gas Meter (Dhanmondi) Pilot Project, financed by the company’s own fund, has been initiated. The cost of the project is 6.71 crore. A contract has been signed between BRTC (Bureau of Research, Testing and Consultation, BUET and Titas Gas on 19-11-2009, which price is 3.90 crore. Under the project 5,000 nos. meter would be purchased and 4,500 nos. meter would be installed at domestic customers premises in Dhanmondi and its adjacent area. Necessary actions has been initiated for installation of pre-paid gas meter from September 2010. The work will be finished within May 2011 as per contract.

Installation of System Master Station (SMS) is going on at the head office of the company. Installation of 2 (Two) nos. of  Vending Station (VS) at Lalmatia Regional Sales Office and Dhanmondi Area is under process.Appointment of contractor firm for installation of  Pre-paid Gas Meter at customer’s  premises is under way. It is expected that installation of 4,500 nos. of Pre-paid Gas Meter would successfully be accomplished in FY 2010-11.

Narsingdi-Monohordi Loop Line Project:

 The DPP of Tk. 8409.64 lac of the project was approved on 24 February 2010, with a view to construction of 20″DN x 25 Km x 1000 PSIG parallel/Loop pipeline from Monohordi to Narsingdi Valve Station-12 from  company‘s  source. Preliminary works  for  requisition of  land and partial purchase of  material for the project has been completed. It is hope that the project will be implemented in FY 2010-11.

Development of ICT for building Digital Bangladesh

Domestic Customer’s Ledger/Bill Computerization:

With a view to improving customer services computerization work of domestic customer’s ledger is under implementation stage. Supply and installation of hardware and software has already been completed. In order to make the Metered Billing and Payroll Application Software presently used by Computer Department befitted with time, a more powerful new Server Bull Escala PL 450 R/T has been replaced in August 2008 with a view to improving customer service by making new Billing and Payroll Application Software using Relational Database Management System (RDBMS) under the UNIX Operating system.

It is expected that after successful implementation of the said programme, awareness will be increased within the customers for efficient use and preservation of gas in the domestic sector. In future, all the domestic customer will be provided with prepaid meters which will also create a great opportunity in preservation of gas.

Introduction of E-Governance:

To improve the customer service of the company particularly to have more transparency and provide better service to industrial customers, E-Governance system has been introduced in the company. In the first phase, on May 17, 2006 network has been established between Head Office and Savar & Joydebpur Zonal Offices.

Modernization of IT system of the Company:

The present Government has declared its Vision-2021 to build Digital Bangladesh. With a view to expansion of E-Governance System of Titas Gas to a greater extent Bangladesh University of Engineering & Technology (BUET) has been appointed as consultant for preparing a time bound  Implementation plan. BUET has already submitted  a  preliminary report to the company. The computer system of the company will be further modernized as per BUET’s recommendation. Gradually all the regional  offices of the company shall be brought under the existing server facility of the Head  Office and  the customers will be provided with online payment facility.

 Introduction of BillPay System:

In order to remove consumer sufferings associated with standing in long queues and various post-payment hassles in payment of gas bills, Titas Gas and Grameen Phone have jointly launched the Bill Pay Service from August 14, 2008. Under this new system domestic  &  commercial customers of can pay their gas bills from anywhere at anytime through their mobile phones or at any GP authorized BillPay Centers. Customers have paid TK.36.64 crores through Bill Pay system during FY 2009-10 compared to 8.94 crores in FY 2008-09.

Project Summary 

01.(a) Sponsoring Ministry/     Division 

(b) Executing Agency                  

 

(c) Implementing Agency

:

:

:

Ministry of Power, Energy and Mineral Resources/ Energy and Mineral Resources Division.Titas Gas Transmission & Distribution Company Limited (TGDCL).

 

Titas Gas Transmission & Distribution Company Limited (TGDCL).

 

02.Objective of the Project           (Please Specify)The main objective of the Project is to improve supply efficiency in the distribution system of Titas Gas Transmission & Distribution Company Limited (TGTDCL). This improved supply efficiency will result in system loss reduction, increase of management efficiency, gas conservation and a positive environmental impact.
03.(a) Estimated Cost of the     Project (In Lakh Taka) 

 

(b) Exchange Rate with date

:

:

I)   Total             :    5,552.09 (US$ 8.0 million)II)  GOB            :     2,081.86 (US$ 3.0 million)III) ADB            :     3,470.23 (US$ 5.0 million)

 

US$ 1 = BDT 69.42 as of October12, 2009

04.Project Implementation Period

:

i) Date of commencement :   January ‘2010ii) Date of Completion      :   October ‘2012 
05.Targets 

:

Component-1:Design, Supply, Installation, Testing & Commissioning of 8600 nos. Domestic/Commercial Prepaid Gas Meters with necessary Hardware ( IC/ Smart Card, Card reader /Writer and Gas Selling Management System-GSMS) and Software (SMS and Vending Software) on Turn Key BasisComponent 2 :

Design, Supply, Installation and Commissioning of  680 Nos. Remote Metering System on Turn-key Basis including Procurement and Installation of Turbine Meters Equipped with EVC.

Component 3:

Consultancy Services in Bid preparation, Bid evaluation, Construction supervision related to Turn-key contracts and to Develop a ‘Portfolio of Projects’ related to Energy Efficiency Improvement.

Participation in the Field of CNG

The company started supplying gas to 117 CNG Stations at present which reduces the dependence on import of energy and prevents environment pollution. CNG conversion able 102 vehicles of the company have been converted to CNG & new vehicles are being purchased with CNG conversion kit which reduces fuel cost to 11.11% for the year 2006-07 compared to the previous year.

Gas Purchases-Sales:

Based on gas demand and   allocation of Petrobangla the targets for purchase and sale  of gas were set at 14,727.00 MMCM and 14,727.00 MMCM respectively for the financial year 2009-10 against of which gas purchase and sale achieved  during  the year were 14,658.39 MMCM and 14,962.94 MMCM respectively. Thus annual growth rates of gas purchase and sales were 8.10% and 11.32% respectively. The sale and  purchase of & gas during last five years under Titas Franchise Area is furnished  in the  following table :

(In MMCM)

Category of Customer

2005-06

2006-07

2007-08

2008-09

2009-10

PurchaseSalesPurchaseSalesPurchaseSalesPurchaseSalesPurchaseSales
Power (Govt.)

3,137.90

2,929.79

3,113.08

2,946.39

3,152.29

3,041.44

3,426.43

3,395.68

3,661.78

3,738.42

Power (Private)

1,952.50

1,824.90

2,008.91

1,902.47

2,149.89

2,076.74

2,175.23

2,156.17

2,249.02

2,249.46

Fertilizer

1,475.61

1,379.19

1,512.99

1,431.79

1,147.82

1,107.78

1,015.07

1,005.82

998.46

1,016.03

Industry

1,614.25

1,509.67

1,915.42

1,814.02

2,257.01

2,179.57

2,442.17

2,421.62

2,715.39

2,769.99

CNG

165.05

154.50

267.83

253.93

466.35

450.51

604.70

599.76

698.49

713.56

Captive Power

1,229.93

1,150.43

1,587.85

1,504.11

1,985.47

1,917.89

2,284.43

2,265.41

2,633.62

2,690.48

Commercial

100.51

93.96

106.24

100.60

124.38

120.11

136.48

135.36

1,42.64

145.60

Industrial

1,200.05

1,122.08

1,321.06

1,250.79

1,393.46

1,345.43

1,474.46

1,461.94

1,561.97

1,594.38

Total

10,875.80

10,164.52

11,833.38

11,204.1

12,676.67

12,239.47

13,558.97

13,441.76

14,658.39

14,962.94

Existing Gas Supply Situation and Measures taken for Improving Gas Supply:

At present four gas distribution companies are supplying gas to their customers of respective franchise area through installation of gas pipeline network. TGTDCL has the lion share and presently approximately two-thirds of the total gas consumed in the country is being distributed  by Titas Gas. About 80% of gas marketed by the company is used for power generation. At present, the company is receiving 1,400-1,450 MMSCFD gas from different gas fields as against a demand of 1,800 MMSCFD, which makes a deficit of 350-400 MMSCFD. This results low pressure problem at Narayanganj, Munshiganj, Savar, Gazipur, Manikganj and some areas of Dhaka City.

In order to augment the gas supply situation, construction of 20″DN x 25 Km x 1000 Psig transmission pipeline from Monohordi to Narsingdi Valve Station-12  at an estimated cost of Tk. 100 crores is under implementation. Besides this, various measures have been taken to solve the prevailing low pressure problem and to improve existing gas distribution pipeline networks of different areas of Dhaka City and  Munshiganj, Mukterpur, Jinjira, Keranigonj.

 Construction of  link line between CGS of GTCL at Aminbazar with 12″ DN x 140 PSIG line & 16″ DN x 140 PSIG main distribution line built under Dhaka Clean Fuel (DCF) Project and Construction of 6″ DN x 50 PSIG x 300 Meter  link line and Regulating Station at Bhanga Bari, Keranigonj have been completed. Construction of 12″ DN x 7.5 Km Distribution Main Pipeline from Panchabati DRS to Muktarpur V.S has already been started. Construction work of 10″ DN x 4.0 Km distribution line from Mirpur DOHS DRS to Mirpur Section-10 has been undertaken. It is expected that after completion of these works, prevailing low pressure situation of some parts of Dhaka City and Munshiganj, Moktarpur, Jinzira, Keranigonj will be resolved and the gas supply situation will  be improved  to a  great extent.

Measures taken for improving gas supply:

a) With the gradual expansion of DhakaCity, the number of customers has also increased. As a result, some times, gas could not be supplied in some areas as per demand with the existing pipeline network. In some areas, low pressure problems have been solved by constructing link lines such as Tejgaon, Palton, Segunbagich Fakirepul, Santiago Postagola, Hazaribagh, Mirpur etc. Under Dhaka clean fuel project 94 KM x16” pipeline has been completed to solve the low pressure problems in distribution system & to supply gas to CNG filling stations. Besides construction work of five (5) new TBS/DRS and modification of five (5) TBS/DRS have been completed.

b) Construction of 16”x300 PSIGx1.2 km from CGS, Akshulia of TGTDCL has been completed to supply more gas in the distribution network of Titas franchise area.

c) To solve the low pressure problem in Madhabdi and its adjacent industrial area under Narshingdhi district a total of 9.5 km gas pipeline have been completed including the construction of 12”x50 PSIG gas pipeline from Makdhabdi DRS to bus stand & 8”x50PSIG gas pipeline at Birampur , Anandi industrial area.

Safety Position of High Pressure Praline:      

Regular patrolling system is essential for maintaining safety of transmission pipeline. But the number of Company’s Patrolmen is inadequate. Therefore, private security service has been engaged for safety of high-pressure pipeline and regular supervision to prevent accident.

 System Loss:

Effective efforts have been undertaken to reduce system loss. The premises of the Industrial & disconnected customers have been inspected by the special teams. In the financial year under review due to sincere efforts put in by Titas Management under the direction of Titas Board, Petrobangla and Ministry, positive result could be achieved from February-06 and system loss could be brought down to 5.26% during the year. System loss has come down to 5.26% compared to 6.47% in the previous year. Necessary steps have been taken to bring down system loss to less than 2% this year.

 SYSTEM loss Reduction Programme:

a) The Company has been implementing different action plans to reduce overall system loss/unaccounted for gas by maintaining area wise input-output & fixing responsibilities, RMS sealing, calibration and replacement of old meters, intensive vigilance, disconnection of unauthorized gas connection by task force, speedy disposal of court cases, electronic volume corrector, flow/pressure logging device etc. Necessary steps are being taken to prepare proper gas bill of all industrial customers through collection of meter reading by computerized remote-metering system for reduction of system loss. Necessary measures have been taken to reduce the present system loss at Narayanganj, Sonargaon Tongi, Narsingdi, Ashuganj and Brahmanbaria and metro sales zone (Ind. & Com. 1, 4). A target-oriented programme is being implemented by assigning officers to collect meter reading through frequent of the customer premises. Meter sealing and testing programme is being implemented by assigning officers to collect meter reading through frequent visit of the customer premises. Meter Sealing and testing Programme is being completed properly and timely.

Despite the best efforts made by the Company and better congenial working atmosphere, reduction of system loss at a desired level could not be achieved due to shortage of efficient manpower, construction of unauthorized by-pass line by the dishonest customers, injunction order of the Honorable Court in favor of defaulter customers, illegal re-connection from disconnected risers, unauthorized use of additional appliances/gas load, excess gas consumption by the un-metered domestic customers, interference on RMS and meter tampering etc. During the year 2006-07 the figures for net gas purchases and sales stood at 11833.38 MMCM and 11204.10 MMCM respectively. The sales figures for Bulk and Non Bulk customers stood at 6280.65 MMCM and 4923.45 MMCM respectively. If system loss is not counted in the Bulk sector, then the total system loss will be 11.21%. On the other hand revenue loss of all kinds of customers including Bulk customers stood at Tk. 174.26 crore and system loss is 5.26%.

b) To reduce system loss and to collect arrear gas bills as per direction often higher authority, the company formed 8 inspection teams and 2 disconnection teams to inspect all the industrial customers’ premises to find out the illegal use of gas by dishonest customers. The special teams have inspected 3869 commercial customers & 1641 industrial customers from March 29, 2007 to April and from May 14, 2007 to June 24, 2007. Among those customers, 537 commercial customers & 99 industrial customers have been disconnected for illegal use of gas. As per application, the disconnected customers have been reconnected according to gas marketing policy 2004 and TK 10.47 corers have been realized as additional bill and penalty.

Emergency Service:

The company has Gas Emergency Control Centres at Dhaka Cantonment, Postogola, Mirpur including the 24 hours central emergency control room at Motijheel. All the emergency calls were promptly attended to ensure safe and smooth supply of gas to the customers and to avoid probable accident and loss. Statistics of Emergency calls received and attended during FY 2008-09 and FY  2009-10 are presented below :

Category of calls

2008 – 2009

2009-10

Fire

139

125

Leakage

5,613

4,322

Low pressure

340

274

No Gas

523

1,248

Others

197

333

Total

6,812

6,302

Payment to Government Exchequer:

Titas Gas is not only earning profit, it is also playing an important role in the national economy by contributing significantly to the National Exchequer through regular payment of CD/VAT, Corporate Tax, Dividend and DSL.Payments to the Government Exchequer during the  last five years are given blow:

                                                                                              ( Crore Tk.)        

Category

FY 2005-06

FY 2006-07

FY 2007-08

FY 2008-09

FY 2009-10

Corporate Tax

96.68

109.78

129.62

159.26

195.25

CD/VAT

12.45

19.10

9.37

15.70

9.10

Ad-Interim dividend

75.04

88.26

80.38

106.54

173.44

DSL

66.42

66.57

66.30

56.73

52.67

Total

250.59

283.71

285.67

338.23

430.46

During the year under review the Board of Directors has recommended a dividend of Tk 173.44 crore which was paid in advance as ad-interim dividend. During the year 2008-2009, the amount of declared dividend was Tk. 106.54 crore.

Titas Gas at a glance

Name of the CompanyTitas Gas Transmission & Distribution Company
Limited (TGTDCL)
Date of Incorporation20 November,1964
Registered AddressTitas Gas Bhaban
105, Kazi Nazrul Islam Avenue Kawranbazar C/A
Dhaka-1215
Titas Franchise AreaGreater Dhaka, Greater Mymensingh and Brahmanbaria
First Constructed
Pipeline
14” Φ x 1000 Psig x 58 Miles Transmission pipeline from Titas Gas Field (at Brahmanbaria) to Demra City Gate Station (CGS)
First Gas supply28 April, 1968 at Siddhirganj Power Station
Authorized CapitalTk. 2000.00 Crore
Paid-Up CapitalTk. 856.47 Crore (30 June 2010)
CorporationBangladesh Oil, Gas & Mineral Corporation (Petrobangla)
Administrative MinistryEnergy & Mineral Resources Division
Ministry of Power, Energy & Mineral Resources
Yearly Gas Sales14962.94 MMCM (2009-2010 Audited Report)
Yearly RevenueTk. 6379.49 Crore (2009-2010 Audited Report)
Payment to the National ExchequerTk. 430.46 Crore
Total No. of Customer1556563 (Up to June 2010)
Constructed Pipeline
Network
12037.26 Kilometer
Market Share in Sales74.4%

Titas Gas Supply AreasDhaka Metropolitan City & Suburb, Jinjira, Savar,
Manikganj, Dhamrai, Aricha, Tongi, Joydevpur, Tangail,Narayanganj, Sonargaon, Munshiganj, Narsingdi, Ghorashal, Brahmanbaria, Ashuganj, Bhairab Bazar, Mymensingh, Netrokona,Tarakandi, Jamalpur, Sherpur, Kishoreganj, Bhaluka, Trishal, GaffergaonSources of Gas SupplyTitas, Habiganj, Narsingdi, Bakhrabad Gas Fields under Bangladesh Gas Fields Co. Ltd. (BGFCL); Kailashtila, Beanibazar, Rashidpur Gas Fields under Sylhet Gas Fields Ltd. (SGFL); and Jalalabad Gas Field; Fenchuganj; Bibiyana; Moulovibazar & Bangura Gas Fields.Total ManpowerOfficer -951
Staff-1470Chief ExecutiveMd. Abdul Aziz KhanListed with DSEJune 9, 2008Listed with CSEJune 19,2008

Objectives of the Study

The objectives of the study are as follows:

Broad Objectives.

The broad objective of this study is to evaluate the planning and performance of Titas Gas T & D Co. Ltd. over the last five years (2006 – 2010).

Specific Objectives.

The specific objectives of the study are as follows:

  • Carrying out strategic analysis of Titas Gas T & D Co. Ltd.
  • Analyze the Financial Performance of the company.
  • To analyze the capital structure and to identify the trade off between leverage and risk i.e. asset – liability management.
  • To identify the optimum capital structure.
  • To analyze the future perspective and suggest measures for improvement.

Scope of the Report

To prepare this report I based on secondary data (annual report, annual budget and other reports and policy directives). Discussions with the concerned managers have been carried out as and when necessary for the development of clear understanding and perception.

A brief and simple set of ratio analysis have been included in the financial analysis part. The research is directed towards the ultimate identification of the shortcomings and to suggest remedial measures there upon.

Type of Research

The project falls in the category of descriptive research, i.e. a research designed to describe the characteristics of the financial performance of the company. It seeks to determine the answer to who, what, when, where and how questions pertaining to the subject.

Basic Research Method

The basic research method in this study is based on the empirical review method. In that the annual report and the yearly budget are the major source of data. Besides, the study of the other financial documents and discussion with the concerned managers yielded the additional information to fill up the gaps and helped in clear understanding.

Sources and Method of Collecting Information.

The main source of information is the study of the annual reports and the yearly budget plans. Besides, consultation of other documents (especially Administrative Manual, Finance Manual, various reports and returns) and discussion with concerned managers had been of great use.

Sampling Plan.

Components of sampling plan are as follows:

Target Population.

Data on financial planning and performance of Titas Gas T & D Co. Ltd.

Sampling Type.  

Non-probability sampling and in that judgmental sampling. This has been done in congruence with the objective of the study.

Sample Size.

5 years financial data for all purposes have been used. Financial data of year 2003 to 2007 has been used for all purposes.

Data Analysis and Presentation Methods.

Various statistical tools have been used for data analysis:

  • Financial ratios and their trend analysis have been included with the Financial Analysis Part. This basic and simple tool is very useful, almost for all kind of financial analysis. It also has served the purpose of exploratory research and helped framing of the descriptive research.
  • All through data have been presented in tabular form followed by statistical analysis and/or numerical interpretation. 

STRATEGIC ANALYSIS OF TGTDCL

Strategy analysis is an important starting point for the analysis of financial statements. Within any given industry some companies are profitable than others. External environment which determine an industry’s attractiveness is not the only factor that affect company profit. An organization need to achieve competitive advantage which otherwise means, a company’s ability to outperform its competitors, to be a successful company.

In this section, attempt will be made to diagnose TGTDCL in terms of its external environment, internal resources, capabilities, competencies and competitive advantages.

External Environment Analysis

Porter’s five forces model identifies the following factors which affects an

 External Environment Analysis

Figure :     Porter’s five forces model

Industry’s external environment.

For a Government organization like TGTDCL it is really very difficult to apply this model for external environment analysis. The reason is that the business TGTDCL is doing is somewhat monopolistic. TGTDCL is the sole company in the area in which it is operating its activities. It has no other competitor to compete with.  In spite of this reality, an attempt has been taken to analyze external environment of TGTDCL using the model.

Risk of Entry by Potential Competitors

TGTDCL is a big Government organization. Normally companies that are not currently competing in an industry, but have the capability of doing so are known as potential competitors. The organizations namely Bakhrabad Gas Systems Ltd., Paschimanchal Gas Company Ltd., Jalalabad Gas T & D System Ltd. and Titas Gas T & D Company Ltd. are actively engaged in gas distribution business, but each of those enjoys monopoly in their franchise area. Since the company enjoys monopoly in its franchise area and no chance of entering new organizations to its area of operation in near future, the industry risk does not arise for the company.

Bargaining Power of Buyers

TGTDCL has got different types of customers. Most of them are domestic customers and some are Commercial and Industrial customers. There are some CNG stations, Captive Power and Seasonal customers also. But, bargaining power of customers is very low as gas price fixation is fully under control of Government.

Threat of Substitute Products

The product is a commodity type of product and till now the threat of substitute products is very low for this company as no other fuel is as cheap and available as natural gas. CNG fuel is saving valuable foreign currency on import of energy and at the same time is preventing environment pollution.  Now a days, the motor vehicles are converted into CNG fueled which helps to reduce fuel cost.

 The Bargaining Power of Suppliers

Normally suppliers become powerful over an organization when any of the following situations prevails:

  • Product that the supplier sells has few substitutes and is important to the company.
  • When the company’s industry is not an important customer to the supplier.
  • When suppliers respective products are differentiated to such an extent that it is costly for a company to switch from one supplier to another.
  • When to rise prices, suppliers uses the threat of integrating vertically forward into the industry and competing directly with the company.
  • When buying companies cannot use the treat of vertically integrating backward and supplying their own needs as a means of reducing input prices.

For TGTDCL none of the above mentioned situations becomes fully applicable.

Rivalry among Existing Firms

Besides TGTDCL there are other gas companies like Bakhrabad Gas Systems Ltd., Paschimanchal Gas Company Ltd., Jalalabad Gas T & D who are actively engaged in gas distribution. But there is no rivalry among them because they are doing business in different area where they are enjoying monopoly in their franchise area.

Internal Environment Analysis

TGTDCL is making stable profit over last several years. In this section, attempts will be made to identify the sources of competitive advantages of TGTDCL.

Nature of Competitive Advantages

The competitive advantage TGTDCL faces is that of monopoly business. The company has no other competitor to compete with. It is entrusted with the responsibility of transmitting and distributing gas to its operational area under Government policies and also monitored by Government. So, all the existing or potential government regulations are generally in favor of the gas transmitting and distributing companies.

Criticism on Strategic Analysis

It has been mentioned earlier that for a Government organization like TGTDCL it is really very difficult to apply Porter’s five forces model for external environment analysis. The reason is that the business TGTDCL is doing is somewhat monopolistic. TGTDCL is the sole company in the area in which it is operating its activities. It has no other competitor to compete with.  So, the company enjoys different kinds of opportunities which are not available for any conventional business organization. All the existing or potential government regulations are generally in favor of the gas transmitting and distributing companies. This is the key strength for TGTDCL.

Conclusion

For being a government organization, TGTDCL enjoys some opportunities which are not available in conventional business organizations. First of all, the company enjoys monopoly in its franchise area and there is no chance of entering new organizations to its area of operation in near future. So, the company faces no rivalry within its industry. This distinct factor makes TGTDCL strengthened against the threats of new entrants. Threat of substitute products is also very low as till now no other product is found as the substitution of natural gas. The effect of bargaining power of buyers gets reduced as policies related to gas price fixation, demand & supply and distribution is fully under the control of Government.

titas gas

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