SNGPL receives Rs32bln from energy sukuk-II

KARACHI: Sui Northern Gas Pipelines (SNPL) has received Rs32 billion from energy sukuk-II issued by the government to raise Rs200 billion to settle circular debt, the company said on Monday.

State-owned SNPL told stock analysts that the company already made payments to settle dues of Oil and Gas Development Company, Pakistan Petroleum Limited and Pakistan State Oil.

The government raised Rs200 billion through book-building of a shariah-compliant debt instrument, energy sukuk-II. Circular debt swelled to near Rs1.8 trillion that includes payables and loans and liabilities parked in the Power Holding Private Limited.

SNGPL said it has already issued invoices related to gas infrastructure development cess (GIDC) to its consumers based in Punjab, Khyber Pakhtunkhwa and Kashmir. “Last date for consumers to pay the first installment of GIDC is September 17, 2020,” said analyst Shankar Talreja, who attended the meeting.

The government allowed GIDC payment in installments from businesses after a court verdict last month for over Rs400 billion of pending cess. SNPL has no plan to change the return earned on fixed assets by independent power producers after reducing their returns, said Talreja.

Textile businesses criticised the government for misinterpreting the court verdict on GIDC, claiming that they are not liable to payment. SNGPL said unaccounted for gas in its transmission network increased almost twofold in the last fiscal year of 2019. Transmission network-related UFG jumped to 7.7 billion cubic feet (bcf) in FY2019 from 2.8bcf a year earlier, it said during an analyst briefing.

“Management expects no increase in transmission network-related UFG from these levels,” said Talreja. “Strategy to curtail these losses is ongoing.” Overall sales mix of the SNGPL comprises 55 percent regasified liquefied natural gas (RLNG) and 45 percent natural gas.

SNGPL told analysts that future pipeline projects in Pakistan are 300 kilometres Turkmenistan-Afghanistan-Pakistan-India, 270 kilometre Iran-Pakistan and 1,100 kilometre north south gas pipelines. In the north south gas pipeline, there is no defined role of SNGP as of now. The company currently has Rs70 billion worth of projects in progress.

Cash flow position of the company improved slightly after the recent decline in oil and RLNG prices. “However, management did not quantify the percentage increase in recovery from customers,” said Talreja. Monthly buildup of amount from the customers who went into litigation is Rs10 billion. Currently, SNGPL has borrowings of Rs80 billion. Of that Rs20 billion are for natural gas and the remaining can be attributed to RLNG, he added.