Summer Internship Project Report on 'e-Procurement' SUI SOUTHERN GAS COMPANY

Internship Project Report
On
By
S. Salman
Iqra University

ST-4/B, Block 14, Sir Shah Suleman Road, Gulshan-e-Iqbal, Karachi. Contact: (+9221) 9902 1000 www.ssgc.com.pk
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SUMMER INTERNSHIP PROJECT REPORT
on
Advantages of E-Procurement and recommendations for the implementation of E-Procurement
at
“Sui Southern Gas Company”
Submitted in Partial fulfillment of the requirements for Internship Certificate.
Submitted by:
S. Salman
Iqra University, Karachi.

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ACKNOWLEDGMENT
In this highly complex society no work can be accomplished by a single individual but needs inspiration and sincere guidance of intellectuals.
With an overwhelming sense of obligations, I avail this opportunity to express my deep sense of gratitude to Mr. Muhammad Ahmed Siddiqui GM and Mr Shakeel DCM (Complaint Cell) who gave me the opportunity to work with Procurement Department.
I emphatically express my profound thanks and heartfelt gratitude to my guides Mr. Saeed Ullah Jan, Mr. Ozair Qazi, Mr. Zikar Kapadia, Mr. Mustafa Iqbal, Mr. Hassan Ansari, Mr. Humair Shaikh, Mr. Irtaza Raza,Mr. Naem Baqir, Miss.Tehzeeb Fatima, Mr. Daniyal, Mr. Qadeer Ansari, Mr.Ahsan Ahmed, Mr. Abdul Qadir, Mr. Khalid Memon, Mr.Imran Mari and Mr. Bilal Altaf for their valuable guidance, timely suggestions and constant encouragement during the entire Internship period.
It is my privilege to express my profound thanks and gratitude to Mr. Gufran Ahmed for his kind encouragement and benevolent guidance at every step during the course of my training.
Finally, I thank all those who helped me directly and indirectly during the course of my summer Internship at SSGC.

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ABSTRACT
The main activity of SSGC is the Transmission and Distribution of Natural Gas to domestic and commercial consumers. This involves various activities like survey, fitting, managing, transportation etc. It requires the technical expertise of experts and various equipment’s of material to achieve the mission. Most of these materials are of both domestic and foreign origin and their procurement requires definite criteria to be followed.
This project was undertaken to study the procedures involved in the procurement of the goods and services items centrally at SSGC embedding all the rules and regulations to be followed as per PPRA being followed and implement e-procurement techniques how it will benefit SSGC in the field of procurement,.

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EXECUTIVE SUMMARY
I, S. Salman a student of Iqra University, Karachi, got an opportunity to carry out my internship project in Sui Southern Gas Company, Head Office Karachi. This prestigious organization is the only Natural Gas supplier in Sindh and Baluchistan regions.
During my internship tenure at SSGC, I strived to investigate and study the Procurement system thoroughly. The objective of my project is to highlight the benefits of the e-procurement process and recommendations for its implementation to the parent organization in terms of reduced material and operating costs, improved compliance, and increased total spend under management. This is a new and exciting area of study with unprecedented benefits if the opportunities are identified and pursued.
In order to achieve the aforementioned objective, I carried out a thorough preliminary research of the entire procurement process. I had a detailed study of the existing documented records of such procurement process. I also had several brainstorming sessions with my fellow executive trainees and my senior company executives regarding the indispensable benefits of this system
This report shows how new dimension such as online purchasing, e-Tendering etc. can be added to the procurement system which enables the company to get the quality product at the most reasonable prices, earn more profit and take part in improving Pakistan’s economy.

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Table of Contents
Description
Pg. No.
Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Company Description
About SSGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Mission & Vision . . . . . . . . . . . . . . . . . . . . . . . . . .
7
E-Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8-9
Advantages & Disadvantages of E-Procurement . . . . . . . . . . . . . . . . . . . . .
10-11
Procurement Process at SSGC
Procurement Cycle at SSGC . . . . . . . . . . . . . . . . . .
11-14
Departmental Structure . . . . . . . . . . . . . . . . . . . . . .
14
E-Procurement Advantages for SSGC . . . . . . . . . .
15
Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16

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Company Description
About SSGC
Sui Southern Gas Company (SSGC) is Pakistan’s leading integrated gas Company. The company is engaged in the business of transmission and distribution of natural gas besides construction of high pressure transmission and low pressure distribution systems.
SSGCL transmission system extends from Sui in Baluchistan to Karachi in Sindh comprising over 3,220 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 388,828 million cubic feet (MMCFD) gas was sold in 2009-2010 to over 2.5 million industrial, commercial and domestic consumers in these regions through a distribution network of over 37,000 Km. The company also owns and operates the only gas meter manufacturing plant in the country, having an annual production capacity of over 750,000 meters.
The Company has an authorized capital of Rs. 10 billion of which Rs 6.7 billion is issued and fully paid up. The Government owns the majority of the shares which is presently over 70%.
The Company is managed by an autonomous Board of Directors for policy guidelines and overall control. Presently, SSGC’s Board comprises of 14 members. The Managing Director/Chief Executive is nominee of GOP and has been delegated with such powers by the Board of Directors as are necessary to effective conduct the business of the company.

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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."
Mission
"To meet the energy requirements of customers through reliable, environment-friendly and sustainable supply of natural gas, while conducting business professionally, efficiently, ethically and with responsibility to all our stakeholders, community, and the nation."

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What is e-Procurement?
E-procurement is the electronic implementation of the procurement cycle. It is the technology- enabled acquisition of goods and services required by an organization at the best value obtainable. The goal is the right product or service, at the right place, at the right time, at the right price in the most efficient manner possible.
Objectives of e-Procurement
• To act as the catalyst for procurement reform
• To enhance transparency, monitoring and control in procurement process
• To bring in economies of scale through aggregation of demand
• To reduce cost of doing business for both government and suppliers
• To establish level playing field and “fair” competitive platform for the suppliers
Procurement Cycle
Procurement is a cycle that consists of up to nine steps, depending on the value and complexity of the buy as well as organizational policies. At a minimum, it starts with need identification (and requisition), proceeds to the generation and delivery of a purchase order (possibly after one or more approvals), and results in the acceptance of an invoice and an eventual (e-) payment. For high rupees and / or more complex purchases, the process will usually include the generation of a goods-receipt or acceptance of labor hours through a time sheet or other mechanism; multi-way matching and reconciliation of the purchase order, goods receipt, and invoice.

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E-Procurement Trends in the Global Marketplace: Government Sector
Some governments in mature economies are adopting e-procurement more extensively as it provides structure, audit trails and transparency of transactions. However, governments in emerging markets are often unaware of the benefits that e-procurement can provide. World Bank research has also found some reluctance by governments in adopting a system that is so fully transparent.
Certain basic requirements need to be fulfilled before an e-procurement system can achieve maximum potential in government. These are recommendations by the World Bank which include expanding ICT services, guaranteeing a secure online environment, development of standards and processes, and most importantly, for purchasers to be trained.
The Ideal Environment Necessary for E-Procurement to Flourish:
Developed internet in country system, in use by suppliers and buyers , business culture which supports competition strongly driven by competitive end profit motivation and willing to adopt new technologies, strong commercial culture, actively competitive markets for MRO goods availability of market wide systems which support information exchange and link buyers and sellers ,e.g. telephones, faxes internet, newspapers, television and advertising developed transportation links for the delivery of goods roads couriers , extra national supply options available to buyers media, financial infrastructure available to facilitate payments for e procurement transactions e.g. banking services, online transfer via e-banking. These all exist in our marketplace so we are ready to advance to the next level.

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Advantages of e-Procurement:
Cost Saving:
As the e-procurement is based on computers, all the purchasing to supplying process and details are on computers which save cost of paper and human energy to deliver files for different formalities from one sections to another.
Tracking:
Centralized tracking of transactions enables full reporting on requisitions, tender inquiry, technical evaluation, price comparison, and evaluation report and purchase order. E- procurement advantages extend to ensuring all the record available from the companies Intranet to authorized department.
Time Saving:
It saves allot of time, if the information is posted online on SSGC website for the required material to be purchased with complete description.
Disadvantages of e-Procurement:
The Buy-side Issues
Complexity of Procurement Procedures.
Organizational Resistance.
Lack of IT Skills among employees.
Lack of resources with Public-Private-Partnership Government.
The Sell-side Issues
Difficulties in changing over to new systems of tendering.
Low levels of technological Skills.
Difficulties in access to site.
Resistance to change.

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The ‘e-Procurement system’ side
Difficulties in establishing & maintaining the system.
Lack of Financial resources for maintenance & transaction handling.
Concerns of
 Confidentiality of bids
 Authenticity of bids
Procurement Process at Sui Southern Gas Company
Procurement Cycle at SSGC
CC(Complaint Cell)
SPM (System Plannig and Monitoring
T.E(Tender Enquiry)
T.R. (Tender Room)
User (Fro Tech. Evaluation)
ORM(Order REcord Monitoring)

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1. User:- Process stats with the need of good or service. First the user will send Purchase Requisition to System Planning and Monitoring (SPM) section of procurement department to purchase the required goods or services.
2. System Planning and Monitoring (SPM):-
After the requisition has been received, SPM will generate requisition, usually SPM only generates Service contracts requisition. Other task of SPM section is to do Scrutiny of requisition to check the availability in stores, check for errors, mistakes, incomplete information or other query if not mentioned by user for further processing else it will return it to user for correction.
3. Complaint Cell (CC):-
Complaint Cell abbreviated as CC. its plays a very important role in procurement department at SSGC which act as a monitor. After passing from every section, file goes to CC for any error or mistake made by respective section for correction. But at intial level after passing from SPM file reaches CC for evaluation and then goes to Tender Enquiry.
4. Tender Enquiry (TE):-
Tender Enquiry's job is to make Tenders based on rules and regulations instructed by PPRA. There are there types of tenders
1. Local Tender
2. Foreign Tender
3. Service Contracts
They are further classified on the basis of worth,
 Normal Enquiry (Below 2million):-

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In Normal Enquiry, tenders are posted on SSGC and PPRA websites from where Suppliers/bidders can take details and take part in submitting their quotations.
 Press Tender (2million and above):-
Press tenders are posted on SSGC and PPRA websites also advertised in 2 newspapers (1 Urdu and 1 English) from where bidders may be notified for details.
T.E also Solve bidders Queries and Issues Normal Tenders.
 Service Contracts:-
They only deals with the services required for SSGC new or old projects.
5. Tender Room (TR):-
When the Press Tenders have been published over websites, Bidders can purchase tenders from Tender Room by submitting a pay order of worth rs 500/ along with required documents. Usually they are asked to submit NTN Number with their Official letter for purchasing of tender, if the service are of engineering purpose then they have to submit Pakistan Engineering Certificate (copy) as well.
Major tasks of Tender Room are:
 Selling of Tender documents (terms and conditions etc).
 Opening of bids.
 Entering record of Bids and quotations quoted by bidders.
6. Order Record Monitoring (ORM):-
After the bids opening ORM generates Evaluation Report, Commercial Evaluation and price comparison list. Technical specifications documents submitted by bidders are sent to user for evaluation. After completion, bidders are categorized as Complaint and Non-Complaint on the basis of their quotation and specification of any technical items.
Then the Complaint bidder is issued Purchase Order (P.O.)
Other ORM tasks are Freight Forwarding, Negotiation of price and delivery schedule.
It also includes arranging of budget.

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GM
DCM (SPM)
Manager
CM(T.E)
Manager
CM(VM/ORM)
Manager
CM(Project)
Manager
DCM(Shipping)
Manager
DM(ERP)
Assistant
Manager
Deputy
Manager
Executives
DGM
7. Enterprise Resource Planning (ERP):
ERP works as an IT representative they design System and do analysis based on requirement. It also generates Reports and logs.
Other ERP task are Training of users to handle the system and software on which they do daily routine work.
Managing and looking after EDMS and all other problems and queries related to system.
Departmental Structure

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E-Procurement Advantages for SSGC:
Cost Saving:
SSGC can get benefits from the implementation of e-procurement as it can save thousands of rupees on papers, file covers and Stationary which are purchased in a huge quantity for the processing of Procurement cycle.
Tracking:
Centralized tracking of transactions enables full reporting on requisitions, tender inquiry, technical evaluation, price comparison, evaluation report and purchase orders. E-procurement advantages extend to ensuring all the record available from the companies Intranet to authorized department.
Time Saving:
It will save time of buyer and seller both if the information is posted online on SSGC website for the required material to be purchased with complete description so the supplier does not have to visit the organization and purchase specifications of the tendered items and ask for queries, rather they can download it through Company’s website. It will also save time of respective section whom will not have to solve queries of individual suppliers directly.
Using technology:
E-procurement advantages can only be fully realized when the systems and processes to manage it are in place. Software tools are needed to create the standard procurement documentation are: electronic requests for information (e-RFI), requests for proposal (e-RFP) and requests for quotation (e-RFQ) which SSGC have implemented and are used on daily basis. These are proven methods to source goods and make the framework agreements that offer the best prices.

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RECOMMENDATIONS
 e-Tendering system should be introduced which may include the features like:
 Uploading of Tender/ RFQ
 Downloading of Tender documents by contractors/suppliers
 Online submission of tenders by bidders
 Opening of bids
 Auto-bid evaluation
 Technical bid evaluation is sometimes handled manually
 Automating this requires a well-functioning contract
 Technical evaluation through a computerized system will be very time saving option which can save man power who analyzes and matches all the descriptions and specifications. This will also help in reducing Errors and there will be lesser chances of corruption after comparing its Technical with system submitted by user and bidder.
 Create a system which will only accept the Bidder with lower price quoted or categorize the selection criteria of bidder for Example: if the bidder is to be selected on the basis of quality then the ORM department can click on the Quality button which will select the bidder providing best quality in ascending order.
 A Standardized Form (like one with given options) for Bidders to add the details of the ‘Bids Quotation’ and ‘Specifications’ of the goods or services can will be an effective step to reduce many problems like error, time, corruption and man power.(for reference online job portals forms are good example)
 Bid Opening Price comparison report can be mailed to suppliers or uploaded on SSGC websites to motivate new and old suppliers to offer lesser prices in comparison to opened bids which will be beneficial for SSGC.

Summer Internship Project Report on 'e-Procurement' SUI SOUTHERN GAS COMPANY

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