VIS reaffirms entity ratings of Sui Northern Gas Pipelines

January 22, 2025 (MLN): VIS Credit Rating Company Limited reaffirms entity ratings of Sui Northern Gas Pipelines Limited (PSX: SNGP) at 'AA+/A1+', a latest press release issued by VIS showed.

Medium to long term rating of 'AA+' indicates high credit quality.

Protection factors are strong.

Risk is modest but may vary slightly from time to time because of economic conditions.

Short term rating of 'A1+' indicates the strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors.

Outlook on the assigned ratings remains ‘Stable’.

The previous rating action was announced on December 1, 2023.

SNGPL is Pakistan’s largest gas transmission and distribution company, serving over 7.5 million consumers in Punjab, KPK, and Azad Jammu and Kashmir.

Listed on the Pakistan Stock Exchange, the Company boasts over six decades of expertise.

It operates an extensive network of 149,242 kilometers in distribution pipelines and 9,239 kilometers in transmission pipelines, serving 5,500 towns and villages.

The assigned ratings are primarily supported by SNGPL's direct and indirect majority government ownership, which reflects strong sovereign backing.

The company's strategic position in Pakistan's monopolistic gas distribution sector, coupled with regulatory oversight from the Oil and Gas Regulatory Authority (OGRA), shapes its business risk profile.

This is further strengthened by its established market presence, guaranteed return on net operating assets, and sovereign presence across the value chain.

SNGPL has demonstrated significant progress in reducing Unaccounted-for-Gas (UFG) losses over the past few years due to targeted efforts to minimize gas leakages and theft.

During the period under review, the company’s revenue saw a boost from tariff adjustments, while its liquidity and coverage profiles remained intact at adequate levels.

Meanwhile, the Company’s capitalization indicators were elevated amid a sharp increase in short-term borrowings due to circular debt challenges.

Going forward, with a continuation of sovereign backing, maintenance of the profitability profile and improvement in capitalization indicators will remain important rating triggers.

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