The Sui Northern Gas Co has decided to make an early payment of over $100 million for overseas debt owed to World Bank aimed to take benefit of low interest rates prevailing in the country.
According to sources, Sui Northern Gas has an outstanding loan of $103 million disbursed by World Bank, carrying an interest rate of 14.5 percent. It is learnt that the Board of Directors has approved the 'pre-payment' of foreign loans subject to the government's approval.
If the loan is refinanced from local market, because of the strong financial footing of Sui Northern Gas, the company is expected to get Pakistan rupee loan at interest rate ranging from 3 to 4 percent. Experts believe that this would result in annual saving of more than Rs 600 million, reducing its financial cost to a great extent, enabling the company boost its profits in the current fiscal year.
Experts said that Pak Arab Refinery (Parco) has recently paid over $300 million to its overseas lenders while several companies have retired rupee loans carrying higher interest rates, switching from low rates to help reduce their financial costs. Besides, because of higher sales and expansion, several companies posted healthy results because of decline in financial charges, analysts said.
The Sui Northern Gas has budgeted an aggressive capital outlay of Rs 11.48 billion for financial year 2004-05, improving its profits and sales.
The gas distribution company would spend a record amount of Rs 4.48 billion under 'Gas Infrastructure Development Project', that is P-8.
Annual distribution plan and other capital expenditure are budgeted at Rs 7.0 billion for the year 2004-05.
In the last two financial years, the gas company has already invested more than Rs10 billion for the development of infrastructure and enhancement of distribution network. This has helped in improving the company's revenues and providing good growth to the asset base that in turn is positively affecting the profitability of the company.
Rising gas discoveries from various fields have caused the need to aggressively improve the infrastructure both in the field of distribution and transmission, sources said. With strong cash flows and low interest rate charged by the banks, it's ideal time to improve and enhance the gas related infrastructure.
Average production of gas in the country during July to March 2004 period was 3173 million cubic feet per day. This is an increase of 20 percent from the same period of last year. PPL and OGDC are the two largest gas producers.
During the period of July 2003 to March 2004, the company's revenues were at Rs 46.25 billion, up 38 percent.
The company earned after-tax profit of Rs 1.86 billion, an improvement of 26 percent during the first nine months of operations. In the recent years the company has earned handsome profit due to increasing capital expenses and declining cost of borrowings.
Comments
Comments are closed.