Takeaways from Sui Northern Gas Pipeline Analyst Briefing

Sui Northern Gas Pipeline (SNGP) currently has Rs70 billion worth of projects in hands . Future pipeline projects in Pakistan are 300km Turkmenistan-Afghanistan-Pakistan-India (TAPI), 270km Iran-Pakistan (IP) and 1,100km North South Gas Pipelines. In North South Gas Pipeline, there is no defined role of SNGP as of now.

Cash flow position of SNGP has improved slightly after the recent decline in oil and RLNG prices. However, management did not quantify the percentage increase in recovery from customers.

Monthly buildup of amount from the customers who have gone into litigation is Rs10 billion.

Currently SNGP has borrowings of Rs80 billion, out of which Rs20 billion are for Natural Gas and rest, can be attributed to RLNG.

Overall sales mix of the Company is 55% RLNG and 45% Natural Gas.

Transmission network related UFG in FY19 jumped to 7.7bcf from 2.8bcf. Management expects no increase in Transmission network related UFG from these levels. Strategy to curtail these losses is ongoing.

The company got Rs32 billion in Energy Sukuk II. Out of this, company made payments to OGDC, PPL and PSO.

Last date for consumers to pay the first installment of GIDC is 17th September 2020. The company has already issued bills to the consumers.

On question pertaining to possible reduction in WACC as IPPs returns are also being revised down, the management said, currently there are no plans to change Return Earned on Fixed Assets.

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