Pengerang Gas Pipeline project on track

Petronas Gas Bhd's (PGB) Pengerang Gas Pipeline project is on track and expected to be completed this year, said chairman Tan Sri Shamsul Azhar Abbas.

He said the project would enable the initial supply of gas from the existing Peninsular Gas Utilisation (PGU) pipeline network to Pengerang and vice versa.

"In addition, the group is expected to achieve final investment decision by the second quarter of 2016 for its Air Separation Unit project, also in Pengerang, for which the heads of agreement was signed in 2014," he told the media after the group's annual general meeting here today.

According to Shamsul Azhar, those are among the growth projects that keep the utility company busy this year onwards.

Although facing a challenging time, PGB managed to secure positive results for the 2015 financial year, he said.

Its revenue was sustained at RM4.5 billion last year, up 1.5 percent from RM4.4 billion in 2014, while profit rose 7.8 percent to RM2 billion mainly due to the tax incentives for the plant rejuvenation and revamp project that was fully completed in early 2015.

He also said PGB's regasification terminal in Pengerang should be fully commissioned by the first quarter of 2018.

"At this point of time, it is about 25 percent completed," he said, adding that the project would likely contribute to the company's growth in terms of income and profitability moving forward.

On capital expenditure, he said PGB, which undertook a loan of US$500 million or RM2.2 billion from Mizuho Bank Ltd early this year, would use the bulk of the loan for its projects and also as a reserve for maintenance.

Asked on the demand for gas in Malaysia moving forward, Shamsul Azhar said PGB does not see demand for gas in the country reducing.

"In fact we are investing in a regasification terminal in Pengerang to basically cater for additional gas which will cater for future requirements," he added.

PGB's resilience, coupled with support from its shareholders, have enabled it to achieve an increase in market capitalisation to RM45 billion as at end-2015, further bolstering the prominence of the firm's corporate branding in Malaysia.

A dividend of 60 sen per ordinary share for the year was approved, representing a normalised dividend payout ratio of 77 percent – a level that is on par with, if not better than, the industry average.