KUALA LUMPUR: Gas Malaysia Bhd does not expect a material financial impact on its earnings this year, following the implementation of a higher natural gas tariff in the non-power sector that came into effect this month.

Gas Malaysia chief executive officer Datuk Syed Faisal Albar told the media after the company’s annual general meeting yesterday  that there would be a cost pass-through to customers.

“There is a blend between the domestic and market prices of liquefied natural gas, so based on the discussion with the regulator, all those costs will be passed through to the customers,” he said.

In its latest quarterly financial statements, Gas Malaysia said the impact of the tariff was dependent on the cost of natural gas purchased as well as the volume sold to customers.

“I think the future supply of gas is pretty much maintained with the Melaka regasification terminal as well as the Rapid project in Pengerang which is a huge project … so I think our future supply will be okay,” said Syed Faisal, in response to a shareholder asking how the gas supply would be maintained.

He told shareholders that while the company was expecting its customer base to grow at a reasonable rate, it was more likely that there would be a higher volume of gas consumption by industrial customers.

For the first quarter ended March 31, Gas Malaysia posted a net profit of RM41.6 million, a 3.6% increase from RM40.14 million in the previous corresponding period.  Revenue rose to RM580.57 million from RM535.44 million previously.

The improved results were attributed to the increase in the volume of gas sold and the number of customers.

Syed Faisal said there would be further expansion on the company’s pipeline network in 2014, which is estimated to cost between RM100 million and RM150 million.

Commenting briefly on Gas Malaysia’s joint venture with Energy Advance Co Ltd, he said, “There was a question of whether or not this venture was sanctioned by the government for us to produce electricity, but what we do is go to our existing customers and see what their energy balance is. If they have the right mix, then it makes sense for us to offer this solution,” he said.

This article first appeared in The Edge Financial Daily, on May 16, 2014.

Business & Markets

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