PetGas sets aside up to RM1.3b in capex for FY21

The figure may rise should new projects be announced amid a bullish outlook on the energy sector

by SHAHEERA AZNAM SHAH / pic credit: PetGas

PETRONAS Gas Bhd (PetGas) is allocating up to RM1.3 billion for its capital expenditure (capex) for financial year 2021 (FY21), slightly higher than the RM1.1 billion allotted in FY20, due to an increase in planned projects.

Its CFO Shariza Sharis Mohd Yusof said the figure may rise should new projects be announced amid a bullish outlook on the energy sector on the back of a resumption of economic activities in the country.

“Some of our projects were affected by the Covid-19 pandemic and restrictions last year, so we do anticipate a slight pick-up in projects secured,” she told reporters after the company’s 38th AGM conducted virtually yesterday.

The group declared total dividends of 127 sen per share for its FY20, including a special dividend of 55 sen per share, which translates to a healthy dividend payout ratio of 125% compared to 84% in 2019.

PetGas’ projects this year include the construction and installation of a 42km-long gas pipeline worth RM541 millon, linking its existing Peninsular Gas Utilisation (PGU) II network to a power plant in Pulau Indah, Selangor.

PetGas MD and CEO Abdul Aziz Othman (picture) said the engineering, procurement and construction and commissioning (EPCC) contract secured in Pulau Indah in early March is underway and expected to be completed in the first quarter of 2023 (1Q23).

“The engineering part of the pipeline is progressing and we expect it to come on stream in early 2023. The pipeline itself is not to cater to the industrial area, but it is for the delivery of gas to the Pulau Indah Power Plant, which will be constructed by Worldwide Holdings Bhd.

“The pipeline is designed with a bigger capacity and should there be any demand along the pipeline, we can easily have a spur line towards Klang and enable our shippers to sell more gas along the lines,” he said.

The 36-inch diametre pipeline in Pulau Indah will carry natural gas to a 1,200MW gas-fired combined-cycle gas turbine power plant in Pulau Indah and related industrial areas along the route.

The power plant will require about 137 million standard cu ft supply of natural gas once commissioned.

Previously, PetGas stated that the gas pipeline project is being undertaken by its gas transportation and regasification business as part of the lateral expansion of its PGU which is regulated under the incentive-based regulation (IBR) framework.

The IBR will determine the cost recovery of the project through the transmission pipeline tariff.

Abdul Aziz said the group is also looking to develop integrated utility solutions for industrial parks in Malaysia’s northern and southern regions.

“The focus is to look at the potential in increasing our power generation capacity we have today and that is still at an assessment stage,” he said.

Following Petroliam Nasional Bhd’s (Petronas) target of achieving net-zero carbon emission by 2050, Abdul Aziz said the target does not alter PetGas’ performance in the short term as 90% of revenue expected for 2021 has been locked on the long-term contracts.

The company continues to support the gas industrial liberalisation through third-party access, while striving to evolve its business model with various opportunities being assessed to support its growth prospects.