Transgaz in 2023: A 150% Higher than Budgeted Profit

Transgaz’s individual net profit was RON 159.9 million in 2023, 56% lower than in 2022, but 150% higher than budgeted, according to financial statements published on Transgaz’s website.

Revenues from the operating activity before balancing and construction activity in accordance with IFRIC12 are higher than those achieved as at 31 December 2022 by 9%, recording an increase by RON 137,360 thousand, to RON 1.7 billion.

These revenues were obtained under the conditions of extension for the period 1 October 2022 – 30 September 2023 of the tariffs approved by ANRE President Order No 32 of 26.05.2021, the report states.

The revenues were influenced mainly by the following factors:

• Revenues from capacity booking higher by RON 80,564 thousand due to:

– capacity booking tariff higher by RON 0.344/MWh, with a positive influence of RON 123,343 thousand

– booked capacity higher by 2,489,350 MWh, with a positive influence of RON 6,220 thousand

– overcapacity revenues higher by RON 45,459 thousand; the amount of overcapacity revenues recorded on 31 December 2022 is RON 75,737 thousand and the amount recorded on 31 December 2023 is RON 121,196 thousand

– revenues from the auction premium lower by RON 94,458 thousand, as a result of the capacity booking auctions carried out under CAM-NC on the interconnection points; revenues from the auction premium recorded as of 31 December 2022 were RON 227,801 thousand, and as of 31 December 2023 – RON 133,343 thousand

• Revenues from the volumetric component increased by RON 19,488 thousand due to:

– volumetric transmission tariff higher by RON 0.14/MWh, with a positive impact of RON 19,985 thousand

– the quantity of gas transported lower than on 31 December 2022 by 448,256 MWh, with a negative influence of RON 498 thousand

• Revenues from the international transmission of natural gas and similar revenues higher by RON 42,379 thousand; according to the Agreement for the termination of the legacy contract between SNTGN Transgaz SA and GPE, the payment of the remaining amounts to be paid is made in instalments over a maximum period of three years, and the revenues received from transmission are regulated according to ANRE Order No 41/2019 and ANRE Order No 34/2014 respectively, depending on the points where capacity is booked, the monthly difference being classified under similar revenues.
• Other operating revenues lower by RON 5,071 thousand.

Revenues from the balancing activity decreased by RON 546,733 thousand due to the following factors:

– trading price lower by RON 301.86/MWh, with a negative influence of RON 602,597 thousand

– higher quantity by 105,068 MWh with a positive influence of RON 55,863 thousand

Revenues from construction activity, lower by RON 129,251 thousand, accounted for in accordance with IFRIC 12, according to which revenues and costs related to services for the construction or improvement of the transmission network, in exchange for which the intangible asset is recorded, must be recognised in accordance with IAS 11, Construction Contracts. Financial revenues with a negative influence of RON 228,193 thousand mainly due to recording the discounted value of regulated assets with the inflation rate of 6.61% as of 31 December 2023 compared to 16.37% as of 31 December 2022 (RON 144,616 thousand as of 31 December 2023 compared to RON 286,877 thousand as of 31 December 2022). In 2022, Transgaz recorded revenues from shareholdings as a result of the reduction of EUROTRANSGAZ share capital by EUR 13.15 million, and in 2023 EUROTRANSGAZ share capital decreased by RON 13,504 thousand, amount collected in August 2023.

Operating expenses before balancing and construction activity in accordance with IFRIC12 increased by 14% compared to 31 December 2022, their level being by RON 202,301 thousand higher, to RON 1.6 billion.

The company recorded savings of RON 38,497 thousand on the following expenditure items:

• Consumption of natural gas on the transmission system RON 36,049 thousand, due to the following factors:

– the quantity of natural gas intended for consumption in the NTS lower than on 31 December 2022 by 126,518 MWh, with a positive influence of RON 25,588 thousand

– the average purchase price lower than on 31 December 2022 by RON 16.68/MWh with a positive influence of RON 10,461 thousand

• Expenses with the licensing fee: RON 2.448 thousand

There were overruns of RON 240,798 thousand on the following expenditure items:

– staff expenses: RON 75,969 thousand

– expenses with provision for risks and expenses: RON 4,753 thousand

– expenses with royalties: RON 49,582 thousand. By Law No 296/2023 on some fiscal-budgetary measures to ensure Romania’s long-term financial sustainability, the provisions of Article 103(2) of the Electricity and Natural Gas Law No 123/2012, were repealed. As of 30 October 2023, the royalty rate has changed from 0.4% to 11.5% of the gross revenue from transmission and transit operations through national transmission systems, according to Article 49(2)(b) of the Petroleum Law No 238/2004

• Depreciation expenses: RON 33,547 thousand for the completion and commissioning of investment projects
• Expenses on auxiliary materials: RON 9,231 thousand
• Maintenance and transport expenses: RON 3,866 thousand
• Monopoly tax expenses: RON 2,522 thousand
• Other operating expenses: RON 60,677 thousand

In 2023 the company recorded expenses with impairment of trade receivables amounting to RON 108,175 thousand, higher by RON 52,800 thousand compared to 2022. The amount of impairment of trade receivables was mainly determined by the non-collection of receivables from Gazprom Export LLC (RON 120,908 thousand) offset by the collection of receivables from Electrocentrale Constanta (RON 20,546 thousand) and Mehedinti Gaz SA (RON 3,214 thousand). As of 31 December 2023, the company capitalised the amount of RON 10,113 thousand (RON 3,345 thousand as of 31 December 2022), representing the difference between the cost of technological consumption achieved over that approved in the transmission tariff, in accordance with the provisions of GEO 27/2022

• Other expenses: RON 651 thousand

Financial expenses decreased by RON 54,340 thousand, due to the decrease in the share capital of EUROTRANSGAZ SRL Chisinau, Republic of Moldova. In 2022 Transgaz recorded expenses from shareholdings as a result of the reduction of EUROTRANSGAZ’s share capital by EUR 13.15 million, and in 2023 EUROTRANSGAZ’s share capital decreased by RON 13,504 thousand, amount collected in August 2023.