[Non-English content] and good morning, everyone. Welcome to PETRONAS Gas Berhad's analyst briefing for the third quarter ended 30th September 2025. Thank you for joining today's session organized via the Microsoft Teams platform. First of all, I'd like to apologize for the late reschedule of the analyst briefing yesterday due to some unforeseen circumstances. Again, thank you for joining us today. I'm Suri, Head of Investor Relations, PGB, and I have together with me again today, Encik Abdul Aziz Othman, Managing Director and Chief Executive Officer of PETRONAS Gas Berhad, Encik Shahrul Azham Sukaiman, Chief Financial Officer. Unfortunately, Encik Wan Khairul Nizam, Head of Business Development and Commercial, is unable to join us today for an urgent meeting. PETRONAS Gas Berhad's analyst briefing for the third quarter of financial year 2025 is divided into four segments.
In the first segment, Encik Aziz will present the key highlights for PETRONAS Gas Berhad for the first nine months. Next, in the second segment, the business updates and financial performance will be shared by Encik Shahrul Azham. This will be followed by the third segment where Encik Aziz will share PGB's focus moving forward. Finally, in the fourth segment, we will open the session for question and answer. All participants are reminded to obey the session rule, where everyone should be on mute throughout the presentation. The presentation was also shared with you prior to the session through the Microsoft Teams channel and the PGB website. You are allowed to ask questions during Q&A. Please be reminded to press the raise hand button, and we will open the microphone for the selected participant.
You may also post your question in the chat box, and we will select any question to be answered. For reference, our financial results is now available at both Bursa Malaysia and PGB websites. To continue with the briefing, I call upon Encik Aziz to share his presentation. Encik Aziz.
Thank you, Suri. [Non-English content] and good morning, ladies and gentlemen. Thank you once again for joining us for PETRONAS Gas Berhad quarter three 2025 performance results. As always, before we go into the results, let's take a look at some of the key external development which has had some impact to PGB business in the past quarter. Firstly, as we have informed in last quarter analyst briefing, Suruhanjaya Tenaga has announced the implementation of a new electricity tariff structure for regulatory period four. That was effective on 1st July 2025, along with revised fuel cost adjustment as a new element. This new structure replaced the previous tariff structure that has been in place since 2014. The new RP4 electricity tariff has resulted in unfavorable impact for the utility segment.
We are currently assessing and, as always, we are developing mitigation strategies to manage the cost implication and maintain the operational efficiency under the new tariff regime. Second, we have seen the ringgit strengthening against U.S. dollar over the past three quarters. In quarter three, the ringgit was at an average of 4.22 per U.S. dollar. Although the impact of forex fluctuation in our operations and projects remain minimal, this will provide some buffer in managing our projects, which has USD exposure. There are other factors with more muted impact for now, such as geopolitics and trade policies. Apart from that, cost of doing business is still high while the market is adjusting to revised subsidy, revised electricity tariff, as well as the SST new rate and broader coverage.
Amidst the challenges, this external environment, especially the element that I have highlighted, PGB continue to maintain a healthy performance throughout the first nine months of FY 2025. With operational challenges during the year, Group continue to demonstrate resilience through disciplined operation, proactive asset management, and sustained cost optimization efforts. Having said that, comparing to the first nine months of 2024. First, PGB Group revenue stood at MYR 4.8 billion, a decrease of 2.4%, or about MYR 119.7 million, mainly due to lower product price in the UT segment, plus impacted by the external environment that I mentioned, and lower gas transportation revenue following a downward tariff adjustment rising from factor for prior years' lower internal gas consumption. Gross profit declined by 6.1%, MYR 109 million, primarily from lower margin in the gas transportation segment, that is due to the reduced revenue.
Cost incurred for gas supply restoration work following the Putra Heights fire incident in April 2025. Utility segment margins was also tighter, in line with the lower revenue. PBT subsequently decreased also by 3.8% or MYR 71.5 million, reflecting from the lower gross profit. Nevertheless, this was partly cushioned by once-off income received from a customer settlement related to an electricity supply agreement dispute. Profit recorded of MYR 1.4393 billion, a decline of 4.3% or MYR 65.1 million. Again, primarily due tighter margin in utility segment and lower gas transportation revenue. These are driven by the reduced product price for utility segment, pricing plan for the gas transportation, a downward tariff adjustment. Additionally, the Group incurred costs related to gas supply restoration works following the Putra Heights fire incident. This impact was partially mitigated, again, as mentioned, by a once-off settlement income received from a customer.
EBITDA was lower by 1.7% or MYR 43.8 million, in line with the lower PBT. Subsequently, earnings per share decreased by 4%, reflecting lower profit attributable to shareholders of the company. Nevertheless, the board of directors has approved a third interim dividend of MYR 0.18 per ordinary share, and this amount to MYR 356.2 million in respect of the financial year ending 31st December 2025.
On the business update for quarter three 2025, following the Putra Heights incident, we have safely resumed gas supply to the affected customer on 1st July 2025 as per our commitment to the government via a bypass pipeline. PGB, as mentioned earlier, is impacted by costs associated with the incident, particularly for the temporary bypass pipeline and revenue adjustment due to availability of capacity during the incident. Total impact for the year is expected to be within the MYR 60 million, as announced to Bursa early this year.
On the third LNG storage tank, we have completed work on the floating storage unit at the RGTP Ground. On August 20th, we achieved commercial operation date for the projects. This milestone creates opportunities for incremental revenue, growth, and margin enhancement from LNG storage services. PGB is disciplined in delivering our portfolio of growth projects, aligned with our long-term strategy to strengthen operational excellence and deliver sustainable value creation. With focused execution on projects that have achieved FID, such as the fiber optic infrastructure project, the 120-MW power plant in Labuan, and the Air Separation Unit, ASU, in Pengerang, we are progressing well with our mitigation measures for these projects. We have come to the detail of our business and financial performance. This section will be presented by Shahrul. Over to you, Shahrul.
Thank you, Aziz, and good morning, everyone. I will take you through the individual business segment and financial performance for quarter three, and also year to date, nine months 2025. Let's start with gas processing segment. For gas processing segment, the gas processing plant, unit three and also unit six, have actually recently successfully completed their planned turnaround in compliance with the statutory requirements. GP segment maintains a high reliability, consistently meeting sales gas demand and gas supply. This resulted in achieving nearly 100% of the overall unit effectiveness and maximize our performance-based incentive under this business segment. In terms of financial performance, against the corresponding quarter three 2024, revenue increased marginally by about 0.5%, contributed by higher IGC incentive following higher volume of IGC savings. Gross profit rose by 7.4% or MYR 14.8 million, driven by lower operating expenditure for the quarter.
Against the corresponding period, nine months 2024, gross profit increased by about 4.9% or MYR 30 million, in line with the lower operating expenses. Moving on to the next segment on gas transportation. Our pipeline network have been reliable during the quarter. Subsequently, the Putra Heights fire incident in quarter two, signifying our commitment in ensuring uninterrupted gas supply, work continuously to restore the pipeline services in the affected areas and have achieved the gas in for the temporary bypass on the 1st of July 2025, while the permanent pipeline replacement work is still ongoing and progressing as planned. With said that, our financial performance against the corresponding quarter three 2024, the revenue decreased by about 4.2% or MYR 12.5 million, following downward tariff adjustment, as mentioned by Aziz earlier. This is mainly due to the sharing factor for the prior year's lower IGC. Can you see?
This is in accordance with the incentive-based regulation framework by Suruhanjaya Tenaga. Gross profit fell by 23% or MYR 35 million from higher operating expenses, mainly due to depreciation as well as increased utilities cost. Against corresponding period, nine months 2024, gross profit fell by 19.5% or MYR 91.6 million, mainly attributable to the downward revenue adjustment, as mentioned earlier, higher utilities cost, as well as cost that we have incurred for the gas supply restoration works following Putra Heights incident in April 2025. Moving on to the regasification segment. Our LNG regasification infrastructure in Sungai Udang, Melaka, and also Pengerang, Johor, sustained their strong reliability performance as a result of our effective maintenance program. During the quarter, LNG regasification in Sungai Udang completed their eligible maintenance. This effective maintenance program will further enhance the operational safety and efficiency for our LNG activities, ensuring safe and reliable operations.
This is even more important as we have started commercial operations of the additional energy storage services in Pengerang, as mentioned by Aziz earlier. For the financial performance against the corresponding quarter three 2024, revenue was higher slightly by 1.8%, contributed by revenue from providing additional LNG storage services in Pengerang, Johor, beginning August 2025. However, this increase was partly negated by the lower revenue following downward tariff adjustment for regasification business. However, gross profit declined slightly by 1.6%, mainly due to high operating expenses related to maintenance activities which aim at maintaining facility reliability. Against the corresponding period, nine months 2024, gross profit reduced by 4.1% or MYR 19.4 million, with high operating expenditure related to maintenance activities for the regasification infrastructure. Moving on to the next segment, utilities.
Our group's utilities plant registered close to 100% product delivery reliability for all our products to all the customers during the quarter. As mentioned by our CEO earlier, Suruhanjaya Tenaga has announced the implementation of RP4 electricity tariff effective 1st July, and the revised tariff has resulted in unfavorable impact to the segment following a lower average price for electricity product. Despite the highest in volume following higher demand, segment revenue declined over the quarter, mainly due to the lower electricity revenue following the downward revision of tariff. This is coupled with lower product prices for steam and industrial gases in line with lower fuel gas price under the Malaysia reference price, MRP. Against the corresponding quarter three 2024, gross profit declined by 37.9% in line with lower electricity revenue, coupled with higher operating costs from depreciation and maintenance activities.
Similarly, against preceding quarter two this year, gross profit was lower, mainly due to electricity tariff adjustment, which was effective on the 1st of July. Against corresponding period, nine months 2024, gross profit fell by 11.8% or MYR 28 million following lower revenue. This was partly negated by favorable impact of lower fuel gas costs following downward movement of average MRP. For PGB group of companies, for quarter group performance was underpinned by our strong operational reliability, where gas processing achieved nearly 100% of product unit effectiveness. Our gas transportation remained reliable with swift recovery restoration after the Putra Heights incident, and both of our regasification terminals sustained high reliability through preventive maintenance activities, while utilities delivered close to 100% product delivery reliability despite the lower tariff and also product prices.
Based on that, our PGB group performance against the corresponding quarter three 2024, group revenue for the quarter was at MYR 1.618 million, a decrease of about 2.3%, mainly from utilities segment in line with the lower product prices as well as the lower revenue from gas transportation segment following downward tariff adjustment because of the shedding of prior year lower IGC. Gross profit declined by 9.3%, or MYR 55.8 million, due to lower margins recorded at both utilities and gas transportation segment. This decline reflects the reduced revenue and increased operating costs, mainly from higher depreciation expenditure. Profit for the quarter decreased by about 13.6%, mainly due to lower margin from lower utilities and also gas transportation segment. This was further compounded by the increased cost, mainly from depreciation, along with the lower favorable Forex movement in the current quarter.
This was partly cushioned by the one-off settlement income from customer during the quarter. Against the corresponding period, nine months 2024, group revenue stood at MYR 4.8 billion, a decrease of 2.4%, mainly due to lower product prices in the utility segment and the lower gas transportation tariff. Gross profit declined by 6.1%, or MYR 109 million, primarily from the lower margin in the GT and also utility segment, as well as the cost that we incurred following gas supply restoration works in GT segment.
The group recorded profit of MYR 1.439 billion, a decline of 4.3%, or MYR 65.1 million, due to the tighter margins in the utility segment and gas transportation. We also incurred costs related to gas supply restoration works following the Putra Heights incident , and the impact was partially mitigated by a one-off settlement income received from a customer in utility segment. Moving on to our balance sheet.
Group total assets at MYR 19.7 billion was higher by 5%, driven by higher property, plant, and equipment from higher CapEx expenditure, as well as we recognized a new right-of-use asset following the completion of high-pressure LNG storage in Pengerang, Johor. Consequently, total liabilities increased by 11.6%, or MYR 523 million, mainly due to recognition of new lease liability on the floating storage unit in Pengerang, Johor. We sustain a strong dividend, leveraging on our robust earnings and efficient capital management. The board has approved, as mentioned by Aziz earlier, the interim dividend of MYR 0.18 per ordinary share, payable on 23rd December 2025. We still able to provide healthy level of payout, more than what we are committed under our dividend policy. That is all from me. I will now pass the floor over to Aziz to share on our company outlook.
Thank you, Shahrul. Ladies and gentlemen, as we look ahead, PGB, as always, is steadfast in pursuing market opportunities aligned with our long-term growth strategy while reinforcing operational resilience and stakeholder trust. Safety and disciplined project delivery continue to be our top priority, which enhance protocol in line with emerging risks to safeguard liability and integrity. Our company continue to demonstrate resilience through disciplined operation, proactive asset management, and sustained cost optimization efforts. This is despite operational challenges during the year. In supporting Malaysia energy transition, we are progressing on infrastructure expansion, and this is to meet rising national demand and exploring opportunities under RMK13 and NETR. This include adding more capacity for regasification terminal, as well as both modernization and upgrading of both gas processing and pipeline.
Beyond gas infrastructure, we are unlocking value from our existing assets through targeted diversification to broaden revenue stream and deliver sustainable returns. While market conditions offer promising opportunities, we remain mindful of potential risks. We have heard a lot about carbon tax implementation, regulatory changes, and of course, global geopolitical developments. We will approach each initiative with prudence and discipline to ensure sustainable outcome. That is all from me. I shall now pass it over to Suri for the next segment. Thank you.
Thank you, Encik Aziz and Encik Shahrul. We have come to the question and answer session. Please be reminded to continue to obey the session rule where everyone should be on mute to ask a question. Please press the raise hand button, and we will open the microphone for the selected participant. You may also type your question in the chat box, and we will read it out loud for you. We can start now. We have one raised hand there, Daniel from Hong Leong. Hi, Daniel, can you hear us?
Hello, Daniel. Can you unmute?
Hello. Morning. Can you guys hear me?
Yes.
Hi. Thanks for the briefing. I have a couple of questions here. First thing, I would like to know about your other income and about MYR 83.5 million. What are the other incomes inside here?
Hi, Daniel. Yeah, Shahrul here.
Yeah.
The other income that you saw, recorded during the quarter, primarily related to the once-off settlement with our customer due to some commercial dispute, that has been actually recorded during the quarter.
How much is this about? Around MYR 40 million, MYR 50 million?
Yeah, around that. I think, if you look at our utility EBT, I think less than about 2% of that.
Oh, I was thinking this MYR 40 million, MYR 50 million would be?
Around there, yes. Yeah, about that money.
Under other utility side.
Yes, correct.
I see. This is recorded under utility, under segmental, but recorded under other income, under the P&L.
Correct.
You're right.
Yep.
I see. Okay. Second question, can you provide us more updates on this third LNG terminal that is supposed to be coming in soon? Any further details on this? Any updates on this one, LNG terminal?
This is still under assessment. Of course, we need to get alignment with the authorities on the timing and whatnot. We'll make the necessary announcement when it comes.
Okay. Is this project in a fast-forward track kind of thing? By when is this project supposed to come in? I may see all day. Is it by 2030 kind of thing? When are we expecting looking at it? How is this project?
This is depending on the government, we can't say specifically what is the timing, subject to alignment with the government. Yeah.
Yeah. I see. Okay. Maybe I change the questions another way now. For Sungai Udang and also for Pengerang today, what is the utilization right now for both of these plants? Actual utilization, not the committed utilization.
Between 30%-50%., that's for Sungai Udang. For Pengerang
Sorry, 30%-50% for both Pengerang and Sungai Udang?
No. Sungai Udang is about 20%-30%, and then Pengerang is about 50%-60%.
50% is relatively low.
Yep. I think the planning for the new capacity, as you all are aware, the government is looking for more power generation capacity to meet the demand by data center. That's why the expected utilization of our asset in the next few years could go up higher very soon. As per your question, would necessitate more regas capacity.
Yep. Yeah. Sorry, Pengerang and Sungai Udang?
Sorry?
Okay. For your gas processing plant. We do know that there's long-term concern on the gas exploration of productions coming from the Kelantan and Terengganu site. How long do you think this utilization of these gas processing plants in the state is going to last?
We have a long-term, what we call gas processing agreement in place—
Yeah.
—which pay us what we call a reservation capacity, reservation charge based on the booking capacity. I think we have met the announcement, the capacity of 1,750. That capacity is booked on long-term basis until after 2030s.
Until after 2030s.
Yep.
2030s. Have you guys actually done research or studies on how long will the gas field outside of the state going to last?
That's the responsibility of the shipper. Again, you must understand, PETRONAS Gas is an infrastructure company.
We only provide services on the capacity. The capacity is booked well into 2030s.
Okay. That's all from me. Thank you.
Thank you.
Thank you, Daniel. I think next on the line is [Foong].
Hi. Morning, management team. Two questions from me, both related to the Putra Heights fire incident. Firstly, can I get some clarity on whether there's any cost incurred or impairment for the Putra Heights fire incident in the third quarter? If so, how much was that? On the second question, noted that you have received a writ of summons from some plaintiffs. It was mentioned in the announcement that the quantum of special damages is MYR 68 million. I wanted to understand whether this is largely the potential size of the liability or does the other categories of damages and relief also pose risk of substantial liabilities. Any guidance on the timeline for resolution on this case? Yeah, those are my two questions. Thank you.
I think I'll take the second question first. We have made the announcement to Bursa in regard to that summon, quite detailed. I suggest you refer to that to understand better on this issue. Yeah. The timeline, you know, it was a court case. We have to follow the court proceeding and you know how this case typically progress. Very hard for us to say on this timeline for now.
I think the first one. I'll take the first question. This is in relation to the impairment in relation to the Putra incident. The answer is yes, we made impairment in relation to the damaged pipeline, as well as some of these line pack or gas that we use as a line pack because of the incident, and the magnitude is slightly less than MYR 10 million.
Okay. Mr. [Foong]?
Yeah. Wait, can I just follow up on that? Sorry. The MYR 10 million impairment, you said less than MYR 10 million impairment. Was that booked in the third quarter itself?
Second quarter.
Second quarter. Okay. With regards to your initial guidance that total of MYR 60 million, in terms of cost, will be incurred for this financial year related to the incident. How much have you booked in?
I think close to MYR 40 million because the impairment as well as the repair cost itself, close to that MYR 40 million. What's remaining is I have to check. As mentioned this earlier, because of the unavailable capacity during the incident, we are now finalizing with the shipper on the revenue adjustment. That's between.
Okay.
Yeah. We should be finalizing it soon, and I think it will be captured in quarter four.
Quarter four. Yeah.
Yeah.
I see. That would be something like a remaining MYR 20 million impact in quarter four?
Yeah. We're finalizing it with the shipper. Yep.
Okay. Understood. Just me, I just want to ask you, I've read the announcement on the writ of summons. As you rightly mentioned, it's quite detailed, I'm just trying to understand whether that MYR 68 million, because you only mentioned for the special damages. The other damages, there was no sort of quantification on the amount. I'm just wondering whether is it because that's all we know or we know that actually the special damages of MYR 68 million would largely comprise the majority of the liability?
We are guided by what has been stated in the summon, and that is what being stated in the summon. Other than that, it is very hard for us to say otherwise or even to forecast.
Okay. Noted. Thank you so much, management team.
Thank you.
Thank you.
Thank you, [Foong]. I think we have next, Hern. Apex.
Hi. Good morning. Hern here from Apex Securities. Thanks for having me, PETGAS and the team. Actually I have quite a few questions. I think I will go through one by one. First one is regarding the gas pipeline incident. Can I know, is there any insurance claim already recorded in the third quarter? And also any timeline that most likely is gonna register if it's not yet?
You're talking about our cost for us for the repair, whatever on the damage, right?
Yeah.
Yeah. It's covered by insurance.
We've submitted the claim.
it's still in—
It's still being under process—
Yep.
—by insurance.
Have not recorded any insurance recovery as of today.
Yep.
The work's still in progress. Yep.
Next question is on the settlement for dispute. If we follow, it should be the BASF electricity dispute, which is according to announcement, MYR 53 million. Can I know if this is the amount which is registered in the third quarter and also whether this amount is tax-deductible?
Yes. Taxable.
Taxable.
Yeah.
Taxable. Yeah, sorry.
Yeah.
Yeah, it's taxable.
I would love to have tax-deductible, but it's taxable.
Taxable.
What he said.
Yeah. What you said is correct, the counterparty.
Okay. It's MYR 53 million, right? The amount.
About MYR 52 million.
MYR 52 million.
Don't add one more million.
Okay. My mistake over there. Next question is basically on both are on the margins. Basically for the gas transportation, the margin was down 10 percentage point year-on-year, which most likely is, I believe, due to the bypass pipeline, which has increased the operating costs. Can we expect, moving forward, the operating margin to maintain at around 40%? Can we expect it to go back to 50% like it used to be?
No, I have to correct you. As you know, we are under regulation, right?
Yeah.
The margin is determined with whatever in the regulated regime that has been approved by ST. Year-by-year, there's always adjustment. What we call annual revenue adjustment. This year, we are impacted by the ARA, annual revenue adjustment, affecting our margin. What happen in the future is depending on what will be the landing with the authority with regard to each RP. Yeah.
Okay. The gas transport margin was like 50% in first quarter, second quarter it came down because of the restoration cost. Third quarter is still at 40%. I'm just wondering, moving forward, will it still be more or less around 40%? Can we expect it to bounce back to first quarter level?
To help explain. Basically what Aziz mentioned earlier, the revenue adjustment. What has happened, under the Incentive-Based Regulation, the tariff is fixed for throughout the RP period. Year-on-year basis, that adjustment we made on a couple of items. In relation to the internal gas consumption, the fuel gas that we use to run the operation, the saving that we made on the volume used last year, that's a sharing factor. We keep 75%, we share with the ship owner 25%. The 25% sharing has a landing impact, which been adjusted in this year, in current year.
Okay.
That's the first one. On the margin variation year-on-year, quarter-by-quarter, I think first, the operating margin, if you compare against corresponding period. If you are thinking during the year, that's also impact of the cost relation to Putra Heights works. Towards the third quarter, the cost also increased in line with higher level of maintenance activities.
Okay. This maintenance activity is expected to continue into the fourth quarter or it will reduce?
Yes.
I understand that seasonally, usually PETGAS does most of the ramp up in the maintenance activities towards the year end. Can we expect for this to happen?
Yeah. For this year, yes. It's not the case for every year.
It's not like that.
The maintenance plan program and when we have the window to do the activities.
Yep.
That's how thing we work. Yeah.
Okay. Meaning to say, this is not regarding just transportation. For all the segments, will there be increase in maintenance activities towards the year end or it will be more or less the same as third quarter?
For this year, we anticipate—
For this year. Yeah.
—slightly higher than quarter three.
Okay. Last two questions. First is, Sorry. Utility side. Because the margin also contracted, which is mainly due to the lower tariff and probably a bit of operating expense. Can I know if the utilities and also product prices maintain around more or less the same level, can we expect the margin to be around also this level, 10%, in the upcoming quarters? Yeah.
I think we have explained quite a few times. There are suite of product in utilities. Other than electricity, which is back to TNB tariff, which will be impacted by the Automatic Pricing Mechanism adjustment, the rest is back to the gas price. It will move with that. Yeah. The margin as well as the revenue whatnot, will move with that.
Okay. In general, if the gas price goes up, will it be better or worse off for utility segment?
It depends.
It depends how high is the gas price.
Yeah, it depends.
Okay.
You can pass through the gas only just slightly half of the cost. The rest, if AFA doesn't move or drop, then your margin will be impacted. If the AFA move into a surcharge, then you got a better margin.
Oh, okay.
It reflects the point.
I think it works similar to the previous reading based on ICPT.
Yeah.
If it's a rebate, then not good for us because our revenue below, while the fuel gas cost probably remain the same. If it's a surcharge, then it's an upside for us.
Correct.
Yeah.
Okay. Last question. What's the average MRP forecast for fourth quarter?
Quarter two. MRP. Yeah. You got that?
Quite good. Please.
I don't think they share.
Probably. Normally we share this.
Yeah.
We take—
Because it's not shown there, that's why I asked. Maybe I go back to the floor and you just answer a bit later.
About—
MYR 40 million
About MYR 40 million.
MYR 40 million?
Yep.
Okay. It was MYR 39 million last quarter.
Yep.
Yeah. Just minimal movement.
Okay?
Okay. Thank you, Encik Aziz, Encik Shahrul. That's all from me. I'll go back to the floor.
Thank you.
Thank you. Next we have [Darmini].
Thanks, Suri. I've got four questions, if I may. Hopefully, I'll make them very quick. My first question is on the utility segment. The segment reported a MYR 54 million gross profit during the quarter. You mentioned earlier, there was that dispute settlement that was MYR 53 million. If we remove it, does it mean that the utility segment was actually breakeven during the quarter?
No. I think for utility segment, what you quoted under gross profit is not including the one-off settlement. The one-off settlement is part of PGB group because it appears under other income line items.
I see. Okay. It wasn't part of that segmental profits.
Right.
Yep.
Yeah.
Okay. Thank you. Second is on the gas transportation side. I think you mentioned in the commentary that it was also dragged by higher utilities cost. Does that mean RP4 has resulted in higher electricity bills for yourselves?
The higher utilities mainly related to volume because we do actually flow more gas during the current year.
Understood.
We've got additional infrastructure, additional compressor in [Pangsor] running to support the gas supply.
The higher gas flow.
Higher gas flow.
This is essentially purely because of the Putra Heights incident you've had to incur additional cost. Is that correct?
Not really. It depend on the demand. We have sector III, Klang Valley, northern sector. Sometime, if the demand shifted, then we have to incur more. Generally, if you push more gas into the PGU, you will have to use more utilities.
Okay. This is a structurally higher utilities cost base for the transportation segment?
Yes.
Yep.
Okay. Maybe just an extension to that. The last two quarters have seen the gas transportation segment profits come off quite notably, partially due, I guess, to Putra Heights. Is it safe to say that, once we're done with this year, going into 2026, this average quarterly, MYR 20 million sort of impact to your gas transportation segment will go away and profits will probably resume to the MYR 140 million sort of quarterly profit levels for gas transportation?
On the cost, you are right, because there's a lot of cost because of Putra Heights and whatnot. Going into the future, if nothing change, we expect the margin to remain. As you're aware, we have submitted the package for RP3, and that is still under assessment by the government.
Understand.
Yep.
Thanks. Just two more very quick questions. You mentioned the FSU has started in August. What sort of incremental earnings can we expect from that?
Additional energy storage in Pengerang, you mean, [Darmini]?
Yeah. That's right.
I think it's more of sweating the asset because they have that space and capacity to do that.
We don't incur that much investment for that project. The impact to PAT, between 3%-4%, I think. Yeah, around that. We will see into this next year because it will start full operation.
Full year.
Full year.
Yeah.
We'll probably have better clarity during 2026.
Okay. Understand. Thanks. Just one final question. You mentioned earlier carbon taxes is a challenge moving forward. Does PETRONAS Gas's operations fall under the jurisdiction of this carbon tax that's going to be imposed? Does that lie with, I guess PETRONAS holding company or your shippers?
We do have provision in the contract because as you're aware, the molecule is not owned by PETRONAS Gas.
Correct.
That is something that we need to sit down with the shippers, with regard to the carbon tax exposure.
Okay, got it. It's still unclear at this juncture?
Yep.
Okay. Thank you very much. That's it from me.
Thank you, [Darmini]. Thank you, [Darmini]. We'll take one last one from [Anshu].
Hi. Good morning. Can you hear me?
Yes. Yep. Yes, [Anshu].
Yeah. I just had a couple of questions. To start with, for the utility segment, you mentioned that you're looking at certain mitigation measures to assess and reduce the impact from the new tariff. If you could share, what are some of the likely levers that you could pull to reduce the impact? And also, just on this, the latest AFA release have announced some recent rebates. Are we expected to see further decline in utility, specifically the electricity margins in 4Q as well?
As you know, we have always been focusing on operational efficiency, irrespective of whatever challenges that we have. The renewal of the contracts sometime in 2023 with the customer do mitigate some of the particularities of the markets, the external environment. Efficiency of the whole utilities is something that we have been focusing on. Some through machine upgrading, et cetera. Yeah? Those are part of margin protection that we have embarked on. Yeah?
For 4Q, do you see further hit considering the latest AFA releases, the rebates?
Sorry, can you repeat again? You know, the rebate
Oh.
The rebate AFA in November is MYR 0.08.
Yes.
It's all published. You can look at the rebate. Today is rebate. Of course, we don't know change into surcharge or even go back to zero. Now it's a month-to-month—
Yes.
—number that is being announced by the government, similar to the ICPT. ICPT is six months. Similar to the gasoline APM.
Yes.
Yeah?
Yes.
Yeah.
Margins are worse off in 4Q effectively, because I think the rebates were close to MYR 0.01.
Yeah. Of course, because it's rebate. Higher rebate.
Yeah.
I think you are now very familiar during the ICPT regime also, when it moves, you can see the movement to our margin accordingly.
Yes. My next question is regarding the RP3. Any update, any discussions, where are you seeing the allowed returns, CapEx, and any other thing that you have discussed, if you could share? Just a precursor.
The discussion is ongoing. The government is yet to decide. As what we have practiced before, when the decision is made, we will have one session to explain accordingly. As always, we expect sometime in December, because the whole thing needs to start on 1st January next year. Let's see. Like before, we have the session to explain the new regime.
Just maybe if I could ask this. I remember previously, during the last RP, your main requirement was the adjustment for IGC frequency to change, which was then changed from three years to every year. Similarly, the impact of CapEx. Is there any wish list that you have given to the regulator in terms of what will ease the volatility? Volatility is very low in earnings, but still, what will ease your operational impact?
Sorry, [Anshu], you are talking under RP3, is there further adjustment to the framework that we asked?
Yes. Yeah, that as well.
Okay. Because during RP2, the framework also being adjusted within, during the RP itself. I think what we have seen, the latest framework given by ST, based on our official requirement, I think all is there. We will need to see from time to time what else. Because where we is, we want to minimize exposure to market movement, because we are just the infra owner. For now, what we have in the framework seems to be able to address our key concerns regarding the volatility of expenditure, especially your IGC. You recall we submitted RP2. There were a few requests from us. Some were incorporated. For example, Forex, et cetera. Yes. IGC regime. During the RP2 period, there were further adjustment. Subsequent to that, we took all that and put up under RP3.
Submit as a package incorporating all those. As Shahrul mentioned, if there are other things that we think is fairer for us and them, we will adjust during RP3. We will request for adjustment during RP3.
Understood. Those are all my questions. Thank you so much.
Thank you.
Thank you.
continue then.
Okay. I think we'll take one last question. Coming back to Daniel.
After that.
Okay, no vac.
Hi.
Yeah.
Can you guys hear me?
We can.
Just a little update on last. I remember previous quarter, management has guided on the exploration of this battery energy storage venture or sort of outlook and also on the CCUS. Any updates on these two business exploration?
Government has yet to decide on the battery storage.
Has yet to decide. I thought they already come up with the tender kind of thing.
Yeah. We submitted our bid. I don't know whether we'll be successful or not, it depend on government decision. Let's see. The CCS, still under engineering and commercial construct stage.
Engineering and construction?
Commercial construct.
Commercial construction.
Commercial construct, meaning, because, as I think one of you asked just now, we don't own the molecule. We are talking to the owner of the molecule, how all this will be dealt with in as far as charges and whatnot. That's what I mean by commercial construct.
Oh, commercial construct.
Not construction. Good point. I say we are constructing, huh?
Okay. Just to check on the CCUS. Last time was mentioned that you guys want to use existing infrastructure of the gas pipeline to transport or to move the molecules to reduce the carbon emission. Is this correct, or you guys are supposed to build new structure—
No.
—next to the existing infrastructure?
No. I think, overall, the CCS is you are capturing the CO2, then you send it to a storage reservoir offshore. Our responsibility is just to capture and then, if there is a treatment, some treatment, and then send it back to the offshore reservoir. If any old pipeline to be used, it will be the offshore pipeline, not our pipeline.
Offshore pipeline, not your? You guys may have to incur additional capacity to capture and send.
Yeah.
Offshore pipeline. I see. The BESS submitted bid, this is under EC, right? This submitted bid.
Yeah.
When are we expected to know the outcome?
I don't know. This is with the government.
Oh, there's no timeline to say that when are they supposed to announce it?
I suppose they said they want to announce before today, but so far, no decision.
Oh, okay. I mean, the result's supposed to be out by before today already. So far, no news.
A lot earlier. We don't know.
Okay. This is for 100 MW, is it? 100 MW and then 400 MWh.
I think from the RFP, they said they want to install 400 in four location, 100 at each location. That's the RFP.
I see. All right. You guys are interested in the northern part or the southern part or the east or west?
Try to find the best sunshine area. Right?
The place with the highest sunlight.
Highest sunlight.
Yeah. Okay. It's not in the northern side. It's more to the eastern side.
You should read the meteorological report.
I should read, doesn't mean I could know everything. Okay. That's all from me. Thank you.
Thank you, Daniel.
Yeah.
Thank you, Daniel. That is all the time we have today. Thank you for your active participation and engagement. We hope to see you again in the next quarter in February, [Non-English content]. Thank you, everyone.
Thank you.