PetGas: Minimal impact from lower IBR tariffs

by NG MIN SHEN / pic by TMR FILE

PETRONAS Gas Bhd (PetGas) does not expect a significant impact from the lower gas transportation tariffs for 2019 under the incentive-based regulation (IBR) framework as the reduction will be implemented in phases.

“Based on our negotiations with the Energy Commission (EC), instead of a sudden reduction, we will have a gradual reduction over a period of seven years. So, the impact for this year is very minimal,” PetGas MD and CEO Kamal Bahrin Ahmad (picture) told reporters after the group’s AGM on Tuesday.

The gas infrastructure and utilities arm of Petroliam Nasional Bhd (Petronas) mainly operates across four business segments — of which the gas transportation and regasification sectors are regulated by the EC, while the gas processing and utilities businesses are not.

According to PetGas chairman Datuk Mohd Anuar Taib, the regulated segment contributes about 40% to PetGas’ revenue, whereas the non-regulated business share is more significant.

“A lot of work has been done on both sides, so that will minimise the impact (of the lower tariffs),” he said, declining to reveal the company’s exact impact projections.

Effective January 2018, the group’s gas transportation and regasification segments are required to comply with the Gas Supply (Amendment) Act 2016, which includes regulation by the EC.

In December last year, the EC prescribed the IBR framework in setting the base tariff for utilisation of the peninsular gas utilisation (PGU) system, the Regasification Terminal Sg Udang, Melaka (RGTSU) and the Regasification Terminal Pengerang, Johor (RGTP).

PGU is held and operated by PetGas, while RGTSU is owned and operated by the group’s wholly owned unit, Regas Terminal Sg Udang Sdn Bhd. RGTP is held and operated by PetGas’ 65%-owned subsidiary, Pengerang LNG (Two) Sdn Bhd.