{"id":60307,"date":"2024-12-25T13:46:43","date_gmt":"2024-12-25T08:46:43","guid":{"rendered":"https:\/\/dailyausaf.com\/en\/?p=60307"},"modified":"2024-12-25T13:46:43","modified_gmt":"2024-12-25T08:46:43","slug":"ogra-approves-sngpl-request-for-rs-8-5-billion-in-recoverable-finance-costs","status":"publish","type":"post","link":"https:\/\/dailyausaf.com\/en\/business\/ogra-approves-sngpl-request-for-rs-8-5-billion-in-recoverable-finance-costs\/","title":{"rendered":"OGRA approves SNGPL request for Rs. 8.5 Billion in recoverable finance costs"},"content":{"rendered":"

ISLAMABAD: The Oil and Gas Regulatory Authority<\/a> (OGRA), has made a decision that greatly encourages Sui Northern Gas Pipeline Limited (SNGPL). Permitting pass-through of 88% of only requested FY23 finance cost has become a huge milestone.<\/p>\n

SNGPL had asked that the FY23 finance cost be allowed as pass-through be Rs. 9.7 billion, but finally allowed Rs. 8.5 billion by OGRA speaks volumes. Even so, OGRA had earlier put a stay on allowing SNGPL<\/a> a pass-through on finance costs during FY23 until SNGPL presented an independent auditor certificate for FY23.<\/p>\n

Now that the Independent Auditor’s certificate has been submitted, after due correspondence between the authorities according to the March 15, 2023, directives, OGRA has allowed 88% of finance cost to be passed on.<\/p>\n

This means that finance costs will be allowed to the company against the outstanding differential amount against RLNG<\/a> diversion, RLNG sales at a subsidized rate, and receivable stuck up from the Power sector as part of circular debt, subject to the provision of an independent audit certificate.<\/p>\n

The impact is highly significant in relation to SNGPL for FY25 accounts. To recap, OGRA had already allowed 50% finance cost pass-through to SNGPL on December 17, 2024, in the review of the Estimated Revenue Requirement.<\/p>\n

Now with this development, let us say, if he allows 88% of the finance cost as pass-through, then the estimates for FY25 would be Rs. 26.5\/share, representing a PE of 3.9 times in FY25E.<\/p>\n

It’s also worth noting that finance cost can be allowed as a pass-through if the said financing is raised or being used to service circular debt-related shortfall or to pay for differential rising from RLNG diversion\/subsidy. As of June 2024, the revenue shortfall of SNGPL stands at Rs. 589 billion, while SNGPL has requested to allow finance for borrowings of Rs. 150 billion.<\/p>\n

Out of this, Rs. 40 billion was borrowed in line with Ministry of Energy directions for onward payment to PSO. Until the clearance of a major portion of this shortfall, OGRA may allow a sizeable portion of finance cost to pass through.<\/p>\n

Overall, this decision by OGRA is a positive development for SNGPL, and it’s going to have a significant impact on their financials. With the allowance of 88% of the finance cost as pass-through, SNGPL’s earnings estimates for FY25 are expected to increase, which is great news for the company and its stakeholders.<\/p>\n","protected":false},"excerpt":{"rendered":"

ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA), has made a decision that greatly encourages Sui Northern Gas Pipeline Limited (SNGPL). Permitting pass-through of 88% of only requested FY23 finance cost has become a huge milestone. SNGPL had asked that the FY23 finance cost be allowed as pass-through be Rs. 9.7 billion, but finally allowed […]<\/p>\n","protected":false},"author":9,"featured_media":60310,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[16510,21875],"class_list":["post-60307","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-oil-and-gas-regulatory-authority-ogra","tag-sui-northern-gas-pipeline-limited-sngpl"],"_links":{"self":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts\/60307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/comments?post=60307"}],"version-history":[{"count":1,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts\/60307\/revisions"}],"predecessor-version":[{"id":60311,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts\/60307\/revisions\/60311"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/media\/60310"}],"wp:attachment":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/media?parent=60307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/categories?post=60307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/tags?post=60307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}