Good day, thank you for standing by. Welcome to PETRONAS Gas Berhad analyst briefing for quarter ended 31st of March 2022. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Izan Hajar Ishak. Thank you. Please go ahead. Thank you, Desmond. Assalamualaikum and good morning, everyone. Thank you for joining our session today for PETRONAS Gas Berhad's analyst briefing for quarter ended 31st March 2022. I'm Izan from Investor Relations. I hope it's not too late to wish Selamat Hari Raya. Hope everyone managed to celebrate the festivity in the best way we can. With us from PGB, we have Encik Abdul Aziz Othman, Managing Director and CEO, Puan Shariza Sharis Mohd Yusof, CFO, and Encik Hisham Maaulot, Head of Business Development and Commercial. We'll start the briefing with key highlights, business updates, financial performance, to be followed by Q&A. For reference, our financial results is available at both Bursa Malaysia and PGB website. The presentation material is available at our website and also at the notified webcast platform. Without further ado, I'll hand over to Encik Aziz for the highlights. Please. Thank you, Izan. Assalamualaikum and good morning, everyone. If not too late for me to wish Selamat Hari Raya to those celebrating Hari Raya. We still have about two weeks of open houses, so please enjoy the food and stay safe. Thank you for joining us today. As always, let us start with the key highlights for the first quarter of 2022. First, I'm pleased to share with you that PGB achieved a commendable performance backed by strong operations and steady revenue streams from our long-term contracts. Nevertheless, the cost of doing business is getting higher. The environment is getting tougher. On our part, within what we can control, we strive to improve our commercial terms with our customers, as well as, further scrutinizing our costs to address these increases. As such, we think that our financial performance will remain resilient despite in the first quarter being affected by several external factors such as the fuel gas price, foreign exchange movement, obviously with the deterioration of our ringgit and of course, tax. If we remove these external factors from the equation, what you see is that our revenue and profit are consistent, steady on year-on-year basis. Despite all this, we managed to deliver an interim dividend of MYR 0.16 per share, which is the same as Q1 of 2021. Sustaining our operation has been our key drive. Nevertheless, we also, as what we have announced last year, few growth project and happy to report that our growth projects are progressing as planned with CapEx for project sanction between 2021 and 2024, as mentioned to you before, close to MYR 1.4 billion. Now, if I can move to the next slide. Briefly to address the external environment, again, as I mentioned, the cost of doing business is getting higher. The commodity price, especially for us, we pay for our fuel gas as well, fuel gas as both at the CPP, GTR as well as utility. The price has been volatile, somewhat affected our IGC and the fuel gas cost, resulting in higher operation costs, especially at our regulated business of GTR as well as at Utilities. This is one of the external factors that are not within our control. As you can see, there is a spike in the price of gas owing to the spike in the oil price. What we can do is to ensure that our operations run smoothly with minimum interruption and of course, manage our cost effectively where we can control. Now, if we can move to the financial snapshot comparing Q1 2022 with Q1 2021. Revenue stood at MYR 1.46 billion, higher than the same quarter last year. Of course, mainly contributed by the higher revenue from Utilities segment, of which, as all of you are aware, is pass-through from the fuel gas. So you have a higher fuel gas, then you get a higher revenue. Utilities obviously not only benefited from that higher fuel gas price, but also higher electricity sale volume, including those under NEDA, which we have started to inject into the grid since August last year. The Group gross profit declined to MYR 612 million, again, driven by higher operating costs by Utilities segment relating to the fuel gas as fuel gas costs for electricity supply. While we have pass-through for non-electricity, but for electricity, we cannot pass-through to the customer. Profit after tax, obviously, was lower at MYR 438 million in tandem with the lower gross profit, as well as lower share from joint venture. A higher effective tax rate, which we have alerted in the previous session. There will be some impact from the Cukai Makmur, which was introduced for year 2022. EBITDA declined to MYR 823 million. Correspondingly, also lower by 8% in tandem with lower profits. Earnings per share, thereby, because of that, was lower by 21% as compared to Q1 2021, reflecting lower profit attributable to shareholders of the company. Dividend per share was MYR 0.16, which is actually similar to same quarter last year. Of course, details on our financial performance will be presented by Shariza later in the session. Now if we can move to the business update. First on Gas Processing, page nine of the slide. Despite all the external challenges, our operation at Gas Processing plant continue to operate at world-class level. OEE, or overall equipment effectiveness, remain within range for both C1 and C2. We achieve 99.9% for sales gas reliability, which obviously translating into excellent delivery, meeting the commitment to our customers. The high level of efficiency also resulted in MYR 29 million of performance incentive achieved in the quarter, to a certain extent negating the higher costs, as I mentioned previously. On updates related to the business, one of our operational initiative is the off-gas rerouting project. We process not only gas from offshore, but also the boil-off gas from the Terengganu Crude Oil Terminal, or TCOT, to our Gas Processing Kerteh complex. This project, which was sanctioned last year, is to capture the boil-off gas from TCOT, bringing it to our Gas Processing plant for PGB to process into useful products. This project will eliminate potential flaring of the gas at the PETRONAS-owned Terengganu Crude Oil Terminal, reducing carbon emissions, but at the same time, improve our overall process efficiency and higher gas yield at PGB Gas Processing plant. The higher efficiency obviously should benefit PGB in addition to return, adding to the return on CapEx as per our Gas Processing agreement term. As mentioned, the total CapEx for this project is approximately MYR 190 million, scheduled to complete in Q3 2023. Upon completion, the expected profit contribution is around MYR 7 million per year. Moving on to Gas Transportation on page 10. The pipeline network reliability for the quarter sustained at close to 100%. We achieve average sales gas delivery of 2 billion scf/d, which actually a 10% increase from the first quarter in 2021. Obviously, the demand has increased significantly with the country moving out into endemic phase. Starting first January 2022, PGU tariff is set at MYR 1.228 GJ/d compared to MYR 1.229 per gigajoule previously. A minimal reduction. This is as per the IBR, or the incentive-based regulation tariff adjustment, which is an annual process to account for additional revenue received in the previous year, so compared to the approved re-approved revenue set in the beginning of RP 1. Now the new tariff will be in effect until 31 December 2022, and we have published the same on our website for reference. On this segment update, we are on track for all projects under GT business. The big one is the lateral gas pipeline project to Pulau Indah, anticipated to complete by year-end or early Q1 next year. The Southern PGU debottleneck projects, which should achieve the initial acceptance by middle of this year. The new compressor station in Kluang, which we have sanctioned last year, late last year, and is on track for completion in end of 2023 or early 2024. Moving on to Regasification, page 11. Both Sungai Udang RGT and Pengerang RGT continue to sustain strong OEE performance, 100% during the quarter. Sungai Udang received one cargo while RGT Pengerang received seven cargos, making it a total of eight cargos for the year. We also have branched out on ancillary services, especially the LNG truck loading service, which is doing well, serving our client, who are moving the gas throughout Peninsula Malaysia. For regas, as far as growth on the regas segment, we have announced our An exercise to secure an expression of interest for a potential third storage tank at RGTP. Again, the evaluation are ongoing. We will share further updates, towards the end of the year once we have better clarity on the viability of the projects. Utilities, if you can go on to page, 12. Overall, we continue to fulfill the customers' demand. Also 100% product delivery reliability recorded across all products. Comparing Q1 2022 against Q1 2021, we have higher plant availability and higher customer offtake, obviously, because of the higher volume of electricity and steam delivered. Industrial gases was lower, because we have a customer shutdown during the quarter. Against Q4, 2021, we saw lower sales volume for our products, again, in line with, lower customer demand. We previously announced that we had concluded several contract renewals with our long-term Utilities customers in 2021. We have since renewed six more major contracts earlier this year, which should come into effect by this April. We look forward to finalizing several other long-term contract renewals this year, which would mean that we will have a commitment to offtake the products for further extension beyond the original 20-year contract that we have entered before. Now, the renewed contracts are based on improved pricing structure. Previous contracts, the allocation between electricity and other products are more skewed towards electricity. Whereas the new contracts we have reduced the allocation to electricity while increasing allocation to other products. The benefit of that is for other products we can pass through through the formula with the customer, thereby the increase in gas price, you can pass through higher percentage through this new arrangement, thereby mitigating better on the higher gas price that we are currently experiencing. This will be better to address the volatility of the fuel gas price. In 2021, also for the segment, we have reached a final investment to build a new plant and instrument F plus connection to deliver Utilities from our Utilities Kerteh complex to a customer's oxyalkylates plant across the fence at our Utilities Kerteh. The company is PCC Oxyalkylates Malaysia Sdn Bhd, which is a new customer. The latest addition to our portfolio of customers residing in Kerteh Integrated Petrochemical Complex. The project's cost is close to MYR 50 million, and it's due to complete by third quarter of this year. The expected profit contribution for this project is between MYR 4 million-MYR 5 million per year. Let's move on to projects update. Again, our focus is on operational excellence and cost to make sure that we can navigate the higher cost better. On the long term, we are also pursuing long-term sustainability through project delivery excellence and investment decision for new growth and sustainable projects. The projects as shown on the left side of this slide are progressing as planned. At the same time, as I mentioned for the segment update, we are also in the midst of finalizing new investment decision, specifically several pipeline extension and new metering station along our PGU pipeline to meet the supply that our shippers has committed with their customers. We will make announcement in due course once some of these project reaching final investment decision. Again, I mentioned about the potential third LNG storage tank at Dungun, working towards project package before end of the year, and power generation opportunities in Sabah. That's all for business updates. We shall now move to financial segment with Shariza. Over to you, Shariza. Thank you. Thank you, Chair Aziz. Good morning, everyone, and also Selamat Hari Raya to those celebrating. Shariza Sharis here, and I'll be taking you through the financials. If you could please turn to page 15. We will start with the segmental performance for Gas Processing. In Q1 2022, as mentioned by Chair Aziz, the Gas Processing business continued to run as usual with sustained revenues and also operating costs. Against the preceding Q4 2021, we saw revenue being comparable at MYR 434 million compared to MYR 433 million. Gross profit was also comparable at MYR 232 million against MYR 235 million. Looking at corresponding quarter, Q1 2021, the revenue increased slightly by 1%, as we enjoyed higher efficiency performance incentives under the Gas Processing agreement due to the plant operations running very well. Segment results declined slightly by 5%, as we saw higher operating costs. Moving on to Gas Transportation, on page 16 or slide 16. As mentioned also by Chair Aziz, earlier this year, we made the announcement on the new PGU tariff, which will be effective on 1 January 2022. There is a minimal reduction of SEN 0.1 GJ/d on the Gas Transportation tariff. Hence, the adjustment will have very minimal impact. We're talking about just over MYR 1 million for the whole year of 2022. Comparing against the preceding Q4 2021, the Gas Transportation segment registered slightly lower revenue by 2% at MYR 288 million. This is purely due to the lower number of days during the quarter. We charge the fees based on a daily basis. If the calendar days are lower, then the revenue will be lower. Gross profit rose by 55%, MYR 283 million, as we recorded lower operating costs. In Q4 of last year, there was higher level of operations and maintenance activities, as well as also mentioned, some year-end adjustment in terms of the internal gas consumption. Moving on to against corresponding Q1 of 2021, segment revenue was comparable, while the results declined by 8% as we registered higher operating costs, mainly the internal gas consumption costs. Again, this is to do with the pricing, obviously similar to the Utilities business. As the gas price increase, the cost for the IGC also increase. Nevertheless, the IGC for GTR, for Gas Transportation as well, is a pass-through cost under the incentive-based regulations. Moving on to Regasification on the next page or slide. Against the preceding Q4 2021, revenue declined by 3% to MYR 344 million. Again, this was due to the number of days in the quarter. Segment results was 4% lower at MYR 175 million due to higher operational expenses. What happened was, in the preceding quarter, we did see an adjustment or a revision on a take-or-pay contract for the electricity cost at the LNG 2. This was a contractual adjustment in Q4. If you were to take away that adjustment, actually the costs were about the same, yeah. Against the corresponding Q1 of last year, revenue was slightly lower by 1%, while the segment results declined by 11%, again, due to higher operating costs. Similar to Gas Transportation, this is due to the higher IGC, or internal gas consumption, on the back of higher prices. We also recorded higher maintenance costs, but these were all in relation to plant activities. Last but not least, to Utilities segment. Comparing the quarter against the preceding quarter, revenue was lower by 5% at MYR 392 million, as we saw lower industrial gases and steam sales. This is in line with the demand trending as there was some maintenance being conducted at some of the customers' facilities. Gross profit declined by 60%. This was due to the higher fuel gas, which we are not able to pass through for our electricity sales. Again, as explained by Aziz, for electricity, the price is referenced or somewhat pegged to the national tariff. When the fuel gas cost increases, the. This cannot be passed through. In comparison for the other products in Utilities, the pricing formula allows for the higher fuel gas price to be passed through here. Against the corresponding Q1 of 2021, we saw a higher revenue by 43%, mainly due to higher product prices as well as a higher contribution from electricity sales following the commencement of electricity supply to the grid from August 2021. Our segment results on the flip side declined by 71%, again due to the narrower margins attributable to the higher fuel gas costs. Moving on to the group, which is on page or slide 19. Against the preceding Q4, we saw slightly lower revenue by 3%, mainly attributable to the Utilities Regasification as well as the Gas Transportation segments, as explained. Gross profit was comparable at MYR 612 million. Profit for the quarter decreased by 10%, as there was some unfavorable foreign exchange movement, as well as a lower share of profit from joint venture companies. In addition, we also saw higher effective tax rate with the imposition of Cukai Makmur or prosperity tax in 2022. Against the corresponding Q1 of last year, our revenue increased by 9%, with higher revenue from Utilities. Gross profit conversely decreased by 14%, again due to the narrowing margins from the utility segment, mainly related to electricity. Profit for the quarter similarly declined by 19%, although it was mitigated by favorable foreign exchange movement, but it was we also did see the higher effective tax rate impact relating to Cukai Makmur. Moving on to the balance sheet on page 20. The group's balance sheet remains robust. We're looking at close to MYR 19 billion in terms of total assets 31st March 2022. Cash and cash equivalents stood at a very healthy MYR 3.7 billion. In terms of the distribution of the segmental assets, this remains similar to our previous quarter on the right side of the page or slide. Now moving on to dividends, as you may be aware, the board has approved a first interim dividend of MYR 0.16 per share, which amounts to MYR 316.6 million, which will be payable on 16th of June next month. The interim dividend reflects our group's strong financial fundamentals while also demonstrating our continued commitment to ensure the level of returns to our shareholders despite, you know, the external factors affecting PGB. With that, I'd like to end the financial section, and I will now pass the line over to Aziz, who will share on some company updates. Thank you. Thank you, Shariza. Looking ahead for 2022, these are the key areas that PGB will focus on in 2022. Of course, we will continue to focus on safe, reliable and efficient operations. As all of us are aware, the Regulatory Period 1 is ending in 2022. We have submitted our proposal to ST for the determination of the tariff as well as enhancement to some of the asset management to ST in March. Currently we are in discussion with ST. This will take a lot of our effort to come up with a regime that we believe should provide us more certainty in the margin from the regulated businesses. Of course, we continue to be focused, progressing, in the growth pursuit of initiative that we have identified. Inshallah, for the remaining part of the year, when we reach investment decision, we'll make the necessary announcement accordingly. Last but not least, as I've mentioned during AGM as well as during the press briefing after the AGM, we are coming up with our sustainability blueprint and work is in progress. Sometime in Q3 or Q4 this year, we will present to our board the sustainability blueprint for consideration, which will become our guideline on the way forward as far as sustainability is concerned. Of course, we will also share any other relevant update accordingly as we progress throughout the year. That's all for now, ladies and gentlemen. Let's now move to question and answer. Thank you. Thank you. We will now begin the question and answer session. To ask a question, please press star one on your telephone and wait for your name to be announced. To cancel your request, you can also press the pound or hash key. Please stand by while we compile the Q&A roster. First question comes from the line of Alex Goh from AmBank. Please go ahead. Yeah, thanks. I have several questions. The first is regarding your internal gas consumption cost. How, in absolute value, how much was this above what was in your RP one structure? And how much of that will be recurring over the next few quarters? And how much of that do you expect to be able to recover under the RP 2 mechanism? Okay. Hi, Alex. Thank you for the question. As mentioned, for the IGC or internal gas consumption, right, it is fully recoverable through the tariff. What makes the difference sometimes is that we have some "savings" where we, say, use less IGC, right? The thing is, for the quarter, what has happened is the price of the IGC has increased. So the savings, which is the difference between what is recovered via the tariff versus the actual cost, has decreased, if that makes sense. So in total, the total cost is fully recovered. The question is, you know, how much more do we gain in terms of efficiency or in terms of the feed-price differential compared to what is recovered through the tariff? For this quarter, unfortunately the gas price has moved a little bit unfavorably. Although we have achieved some savings from the volume side, it has been countered by the increment in the price. What would be your normalized net profit, in other words? Because you mentioned that your price cost has been offset by the savings. What should be the normalized profit? I mean, I feel you compare with the fourth quarter and maybe even the third quarter last year. Yeah. Yeah. The profit has actually been. Yeah. Yeah, itself. What should we be looking in terms of a normalized profit and the additional cost, you know? How, when can we expect that the recoveries come in? The recovery is already happening because whatever that is being recovered right now is sufficient. The only thing that is moving right now is the actual cost because the price of the IGC is moving. For example, moving forward, right, for the next three quarters, if the price continues to increase, then you will see a reduction in terms of the profit. Conversely, if it, you know, if it decreases. Mm-hmm. Yeah. We will see improvement in terms of the profit. Unfortunately, yeah, the price factor is something that we are not able to control, which is why, as part of the RP 2 submission, that is one of the areas where, you know, we are discussing with SC on how best to address the variability which is out of our control. We're trying to emulate other liberalized market where typically infrastructure owner doesn't carry price risk. Whereas in Malaysia, the regime is infrastructure owner carry the price risk. The discussion is ongoing and hopefully we get a favorable, you know, decision by SC where we will be judged on how efficient are we on volume. Yeah. Which reflect the efficiency of operation. While the shippers, who are actually the molecule owner, again, that's their business to take the risk on the molecule value, price, whatnot, they carry that risk. That is some of the package that we are currently discussing with SC for RP 2. Yeah. What you see today is also the spike in the gas price. So you see impact is bigger but normally quarter to quarter the movement of gas price is not as, you know, drastic as what you see in this quarter. But it work both way, yeah. If there's a big drop, then we will see a lot of benefit to the company because the cost is much, much less than what has been approved under the tariff. Yeah. Yeah. I see. Looking over into April, right, how do you see the prices? I mean, crude oil price continues to be elevated. Isn't that the continuing condition now? Yeah. You see between Q1 and Q2 the movement is not as severe as what you've seen last year, right? Suddenly from, I don't know, oil price of $60 jumping to $100. You see quarter-to-quarter, Q1 to Q4. What you see Q1 of 2022 and Q1 of 2021 has big difference because the oil price in Q1 of 2021 was much, much lower. What we expect is between Q1 2022 and Q2 2022, the movement is not as severe as what we have seen previously. It should not have a bigger variability as what you see now. I see. Looking back at the adjustment to the PGU tariff, you know, by SEN 0.1 to gigajoule, can you just run through exactly why it was that? I mean, wasn't the higher cost of gas? Shouldn't it have been imputed into that? Hi, Hisham here. The slight decrease in the tariff was resulting from a new shipper coming in, i.e. Shell, who took about 7 MMscfd of capacity over there. There was an additional revenue enjoyed by RGT, and that has to be adjusted accordingly, after we have gained the additional revenue. It is not due to the increase of price, but it is merely because of the additional revenue that has been obtained by Regas Terminal, from another shipper that came in, into the system. I see. Okay. Right. If I have to look into the second quarter and third quarter, would you say that the first quarter, in terms of absolute profit, would that be reflective for the second and third quarter of this year in terms of the overall, net profit? As I mentioned, we expect the IGC to remain similar to Q1. For the Utilities, as I mentioned, the new contract will come on stream, whereby we can pass a higher percentage of the higher gas price to the customer, so we see better margin at Utilities, compared to Q1. I see. Four of the Utilities contracts were secured and revised in January and two in May. The ones in January, did it reflect the higher gas costs? And if so- It was signed in January, but the effective date ended on thirty-first March. You will only see benefit from April onward. We were very efficient, Alex. We signed much earlier. I see. Okay. Thanks a lot. We will see that. Thank you for the question. We'll move on to the next questions from Daniel Wong from Hong Leong Investment Bank. Please go ahead. Hi. Can you guys hear me? Yes. Hello. Okay. Actually, I have two questions. Maybe I'll highlight. First, start with the first question. On the MRP, the chart you show us, MRP means the fuel gas fuel cost, right? So just want to check, right, we understand that your MRP is adjusted on a yearly basis, is it? I mean, your input cost is adjusted. Or is it the input cost? How to say? No. The MRP is a monthly. The approved cost for our revenue. The MRP is a monthly. Monthly. Published number by Jabatan Statistic Malaysia. From what I understand in PETRONAS website, there is a historical MRP. In the first quarter this year it was around MYR 33.97. Is that number we are looking at? Yep. Okay, we can use that as your cost basis. Okay. Then what is the approved so assume MRP in revenue, input in revenue for your first quarter? Is it lower than this level or you're looking at higher than this level back then? I mean, for this quarter, first quarter. First quarter. In terms of the MRP, as mentioned, it is actually published and available. Yep. You can refer to it at the Department of Statistics website. It gets published monthly. Okay. In terms of- That one is the cost to you guys, right? How about the revenue assumed for you guys for PETRONAS Gas? Is it this level? Is it seven? How does it work? Because if we understand, we assume a flat-ish, assume so-called MRP for your revenue, as if the actual cost of MRP is higher than you assume. That's why you have a margin deterioration. Okay. Yeah. There are two parts. It affects two segments. Okay. First of all, for Utilities, right? For Utilities. Yep. It affects it. The MRP goes to the fuel gas cost, right? The thing is when for all our products, whenever there is an increase or decrease on the fuel gas price because of the MRP movement, it gets passed through. The exception is for electricity. Electricity. Electricity. Okay. Okay. So- I'm referring to G- Yeah. Yeah. The GTP and also RGT. The other segment, yeah, is on the regulated business. Correct. Obviously, the IG, internal gas consumption, the pricing of that, internal gas consumption is also based on the MRP. Okay. You know, actually, in terms of volume, we are consistent with last year. Yep. The only reason the cost has increased is because of the market price. Correct. As a result, that's why there is a decline. Okay. In the profit. Maybe I should put it this way. Yeah. In your IGC, you guys have assumed a benchmark level, right? For, or so-called reference level for your m- Correct. Yes. Correct For your input cost. Okay. Yeah. What is this? In terms of the re- What is this level? Yeah. In terms of the- What is the- Yes. What is the cost that you have just input in, under this revenue? That is, we are not able to share that because that's something between us and. Okay. It's FP. Yeah. Okay. Yeah. Is it supposed to be for every quarter, will it be the same or it will only be revised every half yearly or every year end? It is determined based on the Regulatory Period. Yes. Yes. For example, RP 1 is three years. Yeah. The level is determined based on that period. It's fixed for the three-year period. Fixed for the three years. Okay. Again, as I mentioned just now, Daniel. Yep. That we are trying to change that for RP 2. Okay. Yep. Because we are not in the business of making profit on the molecule. Yes. I see. So hopefully- I understand. That discussion will bear fruit, then. Yeah We will be judged on how efficient we are running the system. Yep. Volume perspective. Yeah. Okay. Next question is that if I follow up this question, meaning, in view that gas prices continue on the rising trend for the past few quarters, even you look at LNG prices import on all regional and worldwide is increasing. It's quite logical to rationalize to actually assume the gas price or IGC price cost to increase in the subsequent two quarters at least. That means your margin will continue to be affected in the coming quarters, but you guys can only recoup back this cost from 2023 onwards. Is it? While that is true, but we are also taking action. Okay. As I mentioned, at Utilities, because of the old contract, the impact is bigger in Q1. But the new contract that we have with ability to pass through the higher cost of gas more, leaving only a portion that we can pass through because of the fixed electricity tariff. So, to a certain extent, that's partially being mitigated if you compare against Q1. Okay. Of course for- Okay. I understand. Yeah? Sorry. Thanks, Daniel. Yeah. Okay. I understand that. Okay. Now, my subsequent question is this. On your utility side, just now you mentioned that your contract with the, with your client, your customer, is it a all-inclusive contract, meaning that it's comprised of, electricity, steam and gas combined together? Or is it independent of each other? Independent, I mean that single for electricity, single for steam, single for gas. How does it work? It's the customer will take, you know, a typical. Our customer is petrochemical plant. Yep. They took all those electricity. Yep. There is one contract. Okay for each customer. I mean, the customer will sign three contract with you guys. If a single customer take electricity, steam and gas, so they will sign three contract with you? Yes. Yes. Okay. They will sign an electricity and other products with us. I say that is. For one customer. For one customer, they will sign this as three contracts or one contract only? I mean, this contract is inclusive. It will be multiple contract. Okay. Because I just want to understand. Yeah. Okay. I just want to understand what do you mean by, yeah, lower, so-called lower. You just now mentioned that you sign new contract with your customer and then you say you have a higher pass through because of higher, lower allocation for electricity. What does it mean? Okay. Daniel, the way utility is designed. Yep It's actually a Cogen plant. Okay. The gas that come in, you use to burn into the gas turbine to produce electricity. Okay. At the same time, while doing that, you produce exhaust from that operation. Yep. The exhaust is used to produce steam. Okay. We also burn additional gas to make sure that we get the necessary quality on the steam. I see. Some of the electricity we produce, in addition to selling to the customer, we also use it for the production of industrial gases, etc. Okay. Instead of you allocate the gas to electricity only. Okay. You allocate to all the products. The old contract, the allocation is higher at electricity. Electricity, as Shariza mentioned, is pegged to the national tariff. If the national tariff doesn't change, it would mean that we can't pass through the gas cost. By virtue that now it is lower allocation to electricity, the remaining portion you pass through to the other product and the other product you can pass through to the customer. You have more buffer on electricity from the cost perspective, even though the tariff. Doesn't increase. Doesn't increase. I mean, the industry itself, if you look at the current high input costs, I'm talking about electricity, yeah. If something doesn't happen soon, I'm not sure whether the electricity sector can sustain the subsidy that has been given thus far. Now, if that happened, then we stand to benefit obviously, because the national tariff is adjusted. Thank you for the questions. Next questions comes from the line of Chi Wei Tan from Maybank. Please go ahead. Hi, good morning, everyone. Yeah. Just a couple of questions from me. Firstly, on the utilities division, given that there was actually an electricity tariff surcharge in place for the first half of 2022 for Peninsular Malaysia, was there not enough to cover these higher fuel gas cost price movement? Also, second question on this. Sorry, do you want me to continue? Maybe we take one by one. Okay. Sure. Yes, we do have the surcharge, but it's still not sufficient, again, because of the sudden surge in the gas costs, Chi Wei. Sure. The gas cost increase was very significant. Yep. The second question, just very quickly, on this tax rate. What the commentary mentioned this regas tax incentive being booked for the quarter. Can I just check what's the quantum and whether was this incentive sustained for the rest of the year? Thanks. Yeah. On the effective tax rate, as you can see for Q1, we are looking at 27%, compared to, you know, usually we register around 21%. So that's more or less the impact of the Prosperity Tax. Also for the regas terminals, they both enjoy tax incentives. For the Pengerang, they are under the RAPID scheme, so they pay very minimal tax, only on their ancillary services, which is, you know, not a big amount. Similarly for RGTSU, they do have investment tax allowance which are still in place. They also pay very minimal tax on their, you know, O&M services and whatnot. The main income, you know, in terms of the Regasification, that is shielded as far as tax is concerned. I see. Does that answer your question? That was the thing for the rest of the year. Yeah. Yep. Got it. Okay. Thanks a lot. Thanks. Thank you for the questions. Next questions comes from the line of Anshul Singhvi from JP Morgan. Please go ahead. Hi. Good morning. I have a couple of questions. The first question is, you mentioned, for Regasification, Q- on- Q, there was a drop in margin due to some contractual adjustment. Could you please elaborate what that was? Yeah. This was at the Pengerang LNG terminal or PLNG 2. This was in relation to the electricity supply contract with one of the... well, with one of the companies within the RAPID complex. It's actually a contractual revision to do with the take-or-pay. It's really the best way to look at it's a one-off, yeah, for Q4. I'm sorry, one-off for Q4 or first quarter? For Q4. You- It was a downward adjustment. We had the benefit of a take-or-pay adjustment. Take-or-pay reduction. Yeah. In Q4. Yeah. You see better numbers in Q4. In Q4. Yeah. It is just a one-off take-or-pay normally being rationalized towards the end of the year. That's why you see better numbers in Q4. It's a one-off, Anshul. Q1 number is- What would be the run rate for? Normal one. Yeah. Yeah. Yeah. For year for Regasification. Yeah. Is 1Q a clear reflection for that? Yes. Yeah. Yeah. Correct. Okay. My second question was regarding your share of associates drop. Could you please explain what that was? The cause? The main reason for the decline is attributable to the Kimanis, our joint venture, KPSB of Kimanis. It's really to do with the unrealized Forex because they do have some forward contracts. Long-term. Contracts in place. Yeah. Yeah. Which was a requirement for their financing actually. It's really just a translation on those contracts for Q1, it's unrealized Forex. It's nothing to do with the operations per se, because obviously they're under a long-term DPA, of- Got it. My last question is regarding the timelines for the next regulatory period. You mentioned that you've already submitted, you're in discussion with ST. When can we expect an update and finalization of those terms? It's RP to RP. RP 1 will expire end of this year. The decision has to be made in time for the new regime from January 2023. We have another eight month or six month of discussion. Yep. Regulatory Period with ST. Okay. Thank you so much. Thank you. Thank you for the questions. Lastly, we have the follow-up questions from Alex Go from AmBank. Please go ahead. Yes. Sorry, the line was cut off. I'm not sure whether this question was asked earlier, just now. Regarding the Gas Processing division, it also encountered high fuel costs. I'm just wondering, is that cost as well recoverable under the current tariff structures? Yeah. Yeah. I mean, for the Gas Processing, the fuel gas consumption is covered under the Gas Processing worked favorably because we are able to claim incentive because we were very efficient. You know, we were able to claim a slightly higher quantum line in terms of the Internal Gas Consumption. Again, in the big scheme of things, you know, you're not talking about a very large amount left as far as the revenue is concerned. Alex, this is where I mentioned during my presentation that where we can control, we focus on that. The gas consumption, we do tweaking here and there in the plant to use less gas to process the gas. Because of that, we got incentive. There is an incentive scheme with the shipper, and we were able to achieve that because of those tweaking for lower use of fuel gas. Yes. Yeah. Basically, this means that the higher IGC cost that you're actually using. It's not IGC in this Gas Processing. It does mean that you are able to compensate later, right, in the second quarter? Is that right? For the Gas Processing, it's a purely pass-through. It's not borne by us actually. Yeah. Compared to Gas Transportation. I think that's the difference. We don't incur the IGC, the fuel gas cost. It's not allocated in the cost. What we're trying to say is, we are judged by the volume that we use. If we use less than the threshold, we get payment. Yeah. Yes. Incentive for that. Whether the gas price goes up or not, doesn't add to the cost. If you use less- Yes. You get some incentive. Yeah. Contributed to your revenue, and subsequently the margin. Okay, great. Thanks. I've got one question regarding the utility side. Given the fact that you have secured new contracts and that would possibly compensate you for the higher gas costs, do you think that your EBITDA or your profit for Utilities can recover back to what we've seen in the fourth quarter of last year? I mean, right now it has a significant drop quarter-on-quarter. I'm just wondering, do you think internally that, you know, this new contract is able to move you back to what we've seen last year? It will recover, but I don't think it goes to the level that you've seen before because, as you see last year, gas was much, much cheaper. Cheaper. Yeah. Compared to what we've seen this year. It's not as bad as Q1, obviously. I see. Okay. The other question is regarding your associates. There's a huge drop in terms of your associates. Was that largely due to the Forex or was there some other element involved as well? Yeah. As mentioned, it's mainly to do with Kimanis, KPSB. Yes, it is due to forex, unrealized forex on translation. Yeah. Okay. One last question is regarding on your CapEx. You mentioned a MYR 1.4 billion CapEx, but does this include the third LNG storage tank, the power new generation opportunities in Sabah and the new- No. Power plant expansion in Peninsular Malaysia? How much would that CapEx be for- No, no, Alex. Yeah. How much would that be then, this additional group CapEx that you're looking at? First, the CapEx is what has been sanctioned. The two projects or three projects you mentioned has yet to be sanctioned. Obviously, we cannot tell you what is the CapEx. Be patient. At appropriate time, we will make the necessary announcement. We're working hard to realize those opportunities. Yeah, Alex? We'll update the CapEx projections as well at that particular point in time. Yeah. Yeah. Thank you for the question. That's the end of the Q&A session. I would like to hand the call back to the management for closing. Again, ladies and gentlemen, thank you. Again, the external environment has been challenging from the cost perspective. Nevertheless, as I mentioned, we are focusing where we can control some of it as we have articulated and answered through your Q&A. Again, let's see how the whole thing will shape throughout the year. As again, Selamat Hari Raya, before I close the session. Selamat Hari Raya, and stay safe. Thank you. Thank you. Thank you. That does conclude today's conference call. Thank you for your participation.