KARACHI: Sui Northern Gas Pipelines Limited’s (SNGPL) profit surged 31% to Rs7.82 billion in nine months ended March 31, 2019 mainly due to a robust growth in gas sales.
The profit stood at Rs5.98 billion in the same period of last year, according to a company notification sent to the PSX.
Accordingly, the earnings per share surged to Rs12.33 in the period under review from Rs9.43 in the corresponding period of previous fiscal year.
During the day, the state-owned utility’s share price dropped Rs1.21, or 1.81%, to close at Rs65.74 with trading in 1.98 million shares at the PSX.
The company reported that its gas sales soared 67% to Rs489.24 billion in the nine-month time frame compared to Rs293.51 billion in the same period of last year. Arif Habib Limited said in post-result comments that SNGPL’s sales surged due to the growing share of expensive imported gas – re-gasified liquefied natural gas (RLNG) – in total sales and an increase in locally produced gas prices in October 2018.
RLNG sales in the network increased 30% over the nine-month period, it said. Cost of sales rose 59% to Rs514.69 billion compared to Rs323.02 billion last year. Finance cost of the company surprisingly skyrocketed to Rs17.42 billion, which was around three times more than the Rs6.39 billion recorded in the same period of previous year.
The brokerage house said the cost escalated due to “continued rise in differential margin (receivables from the government under the provisions of licence for transmission and distribution of natural gas granted to the company by Ogra) to Rs54 billion from Rs44 billion in the same period last year amid improvement in capital expenditure and hence, revenue requirement of the company.”
“As a result, SNGPL relied on increased borrowing to meet working capital requirement,” it said. Gas theft and leakage in the system – called unaccounted for gas (UFG) – slightly decreased to an estimated 10.3% in the nine months under review compared to 10.8% in the same period of previous year, it said.
“We also highlight that previously auditors of the company (AF Ferguson & Co Chartered Accountants) had issued a qualified opinion on the FY18 accounts as SNGPL had recognised disputed revenue on ‘take or pay’ basis; Rs6.66 billion was booked between July 2017 and December 2018.
“Following that, the matter was referred for arbitration to an expert. Auditors have now concluded that the above matter does not warrant a qualified opinion, as of 2QFY19.” it said.
