ISLAMABAD: The profitability of the Sui Northern Gas Pipelines Limited (SNGPL) declined to Rs14.6 billion (EPS: Rs23.01) in fiscal year 2025 from Rs19 billion (EPS: Rs29.92) in fiscal year 2024, mainly due to a reduction in the Return on Assets (ROA) as the regulated return fell from 26.22 percent to 21.25 percent following a decline in the interest rate.
According to Topline Securities, SNGPL conducted a corporate briefing on Wednesday, where the management discussed financial performance and future outlook.
The management noted that the payout has temporarily declined due to the circular debt situation. However, they expect the payout ratio to improve once the issue is resolved. KPMG has been engaged as a consultant to support the resolution of circular debt, and significant efforts are currently under way.
Regarding changes to their asset-based model, management stated that the Oil and Gas Regulatory Authority (Ogra) has been working on revising the rate of return in its previous ROA decision. The OGRA indicated that a revision would occur after some time, and the OGRA is now exercising this option. They believe there will be no change to the fixed-based regime, and it will continue like this.
The company also plans to install 300,000 RLNG connections in FY25 and 600,000 connections annually in subsequent years. They noted that the average cost of RLNG is 30 percent lower than LPG, in addition to being more convenient and safer. As a result, the market response has been strong, with 50,000 RLNG connections already provided within 1.5-2 months.
Regarding RLNG diversion, the management stated that two RLNG cargoes will be diverted monthly, and they expect an improvement in forced curtailment from local E&P fields.
Regarding the UFG benchmark, the management said that the distribution benchmark for UFG is 6.25 percent. The Ogra sets key monitoring indicators (KMis), covering 31 factors, including theft and leakage. Based on the company’s performance against these indicators, Ogra allowed a factor of 1.22 percent for the last year.
The management said that Ogra’s latest decision on REER allows 75 percent of working capital finance costs for the RLNG, compared to 50 percent in previous years. However, in the last FRR, the OGRA approved almost all costs except Rs2 billion. Following the change in the REER decision, management is confident that this cost will be fully allowed in next year’s FRR.
The company’s overall UFG increased by 5.27 percent in fiscal year 2025 vs 4.93 percent in fiscal year 2024, primarily due to a reduction in gas input by the power sector and captive power plants by 65 BCF. If this sales reduction had not occurred, UFG would have been 4.73 percent. The UFG volume remained at 30,026 MMCF in fiscal year 2025 vs 31,319 MMCF in fiscal year 2024.
The company’s mega project includes the injection of 45MMCFD gas from the Palak gas project with an estimated CAPEX of Rs 2 billion. Another project is the Augmentation of the Network in Rawalpindi and Islamabad for Rs27 billion.
Copyright Business Recorder, 2025
