LAHORE: The Sui Northern Gas Pipelines Ltd (SNGPL) has posted strong profitability in 2QFY17 mainly on the back of higher operating profits which is linked with increased capex.
SNGPL has been undergoing major capex for the completion of LNG pipeline scheduled to be completed by the end of FY17. Experts wait for detailed accounts for further clarity; however, SNGPL is expected to undergo a capex of over Rs30 billion in FY17. To recall, SNGPL earns a fixed 17.5 percent return on its operating assets which results in higher operating profits.
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Unaccounted for gas losses (UFG) has also been on the declining side driving the bottom-line of the company. UFG in 2QFY17 is estimated at 8 percent as against over 9 percent in same period last year.
Sales of the company were up by 51 percent YoY to Rs79 billion. However, gross profits remained flat. This time around, gas development surcharge was a payable instead of a receivable which is positive for the company’s cash flows. Other income surged to Rs4.6 billion in 2QFY17 up by 124 percent due to classification of interest income on late payment of gas bills as operating income. Previously, it was classified as a non-operating income.
