Analysts: Subang Jaya gas fire could cost Petronas Gas approximately RM18 million to RM25 million

by DayakDaily Team

KUCHING, April 2: The massive gas pipeline fire at Putra Heights, Subang is estimated to cost Petronas Gas Bhd (Petronas Gas) at least RM18 million to RM25 million, analysts say.

According to a research report by the research team at MIDF Amanah Investment Bank Bhd (MIDF Research), it estimated that Petronas could see a one-off impairment ranging between RM18 million and RM25 million, including revenue loss from the affected pipeline (10 to 15 per cent), repair costs (25 to 30 per cent), public compensation (25 to 35 per cent), and reputational management.

However, it noted that this is its minimum estimate and is highly dependent on the type of damage caused (medical, property, and others), and recovery time.

“In addition, we estimate potentially at least two to three-month worth of additional cost amounting up to RM5 million minimum for compensation to industrial customers if their operations are directly impacted by the damaged pipeline (delays, diverted gas sources, and others), as explosion damage takes months to be repaired.

“If the customers are not directly impacted, compensation may only be hours or days’ worth,” it said.

At the current juncture, MIDF Research estimated the financial impact of the pipeline to be circa one to 1.5 per cent of Petronas Gas’ total earnings.

The research team also expected that Petronas Gas’ share price could experience a knee-jerk reaction to the tragedy yesterday, with a potential decline of 1.8 to 2.1 per cent.

As at 12.45pm today, Petronas Gas’ share prices dipped 0.71 per cent with its share price trading at RM16.76 per share from its last average closing price of RM16.88 per share.

On the long term impact of the incident, MIDF Research opined that it would depend on how effective Petronas Gas manages the aftermath of this fire and one-off, should there be any that is significant to its future earnings.

All in, the research team believed Petronas Gas had responded well to the initial shutdown of the damaged pipe and it has stated that it would conduct due diligence in ensuring PGU is operational within its planned recovery time, safely and cost-efficiently. – DayakDaily

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