KUALA LUMPUR: Petronas Gas Bhd (PetGas) will be allocating a slightly higher capital expenditure (capex) budget of RM1.2bil for financial year 2019 ending Dec 31 due to a higher statutory requirement inspection of its plants.
“We need to do a turnaround or a statutory requirement inspection, where we have to incur some capex. This is part of our growth strategy to make our plant more efficient. We also incurred capex for digitalisation,” managing director/CEO Kamal Bahrin Ahmad said at a press conference after its AGM yesterday.
“The RM1.2bil will taper down after this (year). In normal years, it is around RM300mil to RM400mil to sustain the productivity of the plant. We have a higher capex budget due to our growth strategy. We have a few categories of capex: for routine maintenance, statutory inspections and digitalisation,” he added.
PetGas has about five plants that need to go through statutory inspections, he said.
For its digitalisation effort, the company said it would like to monitor staff movement with regards to productivity.
“If we do not monitor, manpower could be deployed in certain areas but the tools have not arrived. They will go to places that they are not supposed to be and this will endanger their safety. These (will include) the installation of sensors,” PetGas chairman Datuk Mohd Anuar Taib said.
The capex would be funded mainly via internally generated funds, the company said.
“We would obviously consider debt as well, but at this point of time, we do have a very strong cash balance so it would predominantly be funded internally. In so far as whether it would affect dividends, our focus would be to also ensure that dividend levels are sustained.
“All these considerations also take into account the budget value of the activities,” chief financial officer Shariza Sharis Mohd Yusof said.
On growth prospects, PetGas said it sees opportunities to promote gas as a type of shipping fuel.
“The key for us is to look at some of the regulations in the shipping industry. There may be a limit on sulfur (content). If there is a limit on sulfur, most of the current providers would look at how to reduce the use of high-sulfur fuel oil. What we would like to do is promote the use of liquefied natural gas (LNG) as a shipping fuel,” Mohd Anuar said.
“We have bunkering stations in Kudat. That’s where we hope this would actually develop into a future growth area for the company,” he added.
On the state of the industry, Mohd Anuar said the LNG market roughly was the size of about 300 million tonnes per year.
“For Petronas, we export about 30 million tonnes per year. We are the third-largest LNG provider in the world now. The business will continue to grow and we reckon that by 2040, the industry would be double the current size,” he said.