Titas Gas: How a profitable state firm slips into red

The state-owned Titas Gas Transmission and Distribution Company broke its six-decade winning streak and slipped into losses in fiscal 2022-23, the first time in its history.

Since its establishment in 1964, the company, the sole pipeline gas distributor in Dhaka and Mymensingh, has consistently turned a profit.

However, in the most recent fiscal year, Titas veered off its winning streak due to a halving of its distribution margin from Tk0.25 to Tk0.13 per cubic metre, according to company officials.

After incurring Tk167 crore losses in FY23, the publicly listed firm has recommended a meagre 5% cash dividend for its shareholders, down from 10% in the previous fiscal year.

In the outgoing fiscal year, its revenue increased by 44% to Tk8,138 crore, driven by a hike in gas prices for retailers. The company's only source of income is its distribution margin and investment income.

Titas officials primarily attributed the losses to two factors: the Bangladesh Energy Regulatory Commission's halving of the distribution margin in June last year and system losses from household retailer gas usage.

According to its officials, the company made a gross profit of Tk158 crore in FY23, down from Tk770 crore in the previous fiscal year.

But after paying taxes and other costs, it incurred a net loss of Tk165.14 crore in FY23. A year ago, the company made a profit of Tk318 crore.

An official from Titas' finance department said the National Board of Revenue has collected Tk562.95 crore in advance income tax (AIT) from Titas Gas sales, which is supposed to be refunded to the company.

"We have not received any refund from the NBR, despite sending several letters. Until June 2023, Titas Gas is supposed to receive Tk2,239 crore from the NBR," the official added.

Titas will hold its annual general meeting on 20 December. The record date for identifying shareholders eligible for dividends has been set for 15 November.

At the end of June 2023, its loss per share was Tk1.67, its net asset value per share was Tk71.75, and its net operating cash flow per share was Tk12.30.

Company officials said the Titas management has repeatedly urged the government to increase the gas distribution margin in order to help the profitable, publicly listed company, which pays a decent dividend to its shareholders, survive.

The BERC recently increased the gas distribution margin for Titas to Tk0.21, which will be applicable in the current fiscal year.

So the officials hoped, though it is not a sufficient measure, that the company would get breathing room as its income from the margin would go up and again return to profit.

Also, in May this year, Titas wrote to Berc requesting it to re-set the monthly gas consumption of unmetered single and double burners.

The letter mentioned that currently, the gas consumption in unmetered one-way stoves is 73.41 cubic metres and that in unmetered two-way stoves is 77.38 cubic metres.

But during the new price determination in June last year, the gas consumption was considered to be 55 cubic metres for single burners and 60 cubic metres for double burners—way less than the current consumption.

As a result, this system loss was reflected in Titas Gas's financial statements, and the firm turned a quarterly loss.

Hence, Titas Gas wrote to Berc to consider 76.65 cubic metres of gas consumption for single burners and 88.44 cubic metres for the two-way ones until the metered gas consumption of unmetered residential customers is confirmed.

Titas Gas was listed on the Dhaka and Chattogram bourses in 2008 under direct listing by offloading 25% of shares in the stock market.

Currently, Petrobangla holds 75% of the company's shares. The remaining 25% of shares are held by foreign investors, intuitional shareholders, and general shareholders.

Titas Gas transmits natural gas from the gas fields to different areas for power, fertiliser, industrial, commercial, captive power, feed gas for CNG, and domestic consumers.

At present, it has a gas pipeline network of about 13,320.39 km and a total connection of gas customers of 28,77,604 km, including eight power stations of the Bangladesh Power Development Board, 39 private power stations, and three fertiliser factories in the bulk category.