DOHA: The Qatar Gas Transport Company (Nakilat) has seen its profits dip in the first half of 2013 due to a loss on derivative instruments.
Nakilat made profit from operations of QR374.7m for the first half of the year, down from QR385.4m for the first half of last year. Net profits were also down, at QR359.6m compared with QR380.8m.
Nakilat attributed the drop in profits to a loss on derivative instruments from joint ventures. The loss on derivative instruments is heavy in H1 2013 compared with the loss for H1 2012. Nakilat’s loss on derivative instrument in H1 2013 jumped to QR15.1m compared to the H1 2012 loss of QR4.6m.
Nakilat explained that the loss was due to a technical disqualification of the applicable derivates as hedging instruments in accordance with International Accounting Standard 39.
“This accounting treatment is only a non-cash accounting entry and does not affect the economics of the derivative transactions nor the cash flows or liquidity of the company. Nakilat and its joint ventures are exposed to high interest risk on the borrowed funds. The risk is managed by the use of interest rate swap contracts, which will protect the company from increases in interest rates in the future. The Majority of Nakilat and its joint ventures borrowings were obtained at the time of the company’s time charter party agreement were signed with our charters”, the company noted in a filing to Qatar Exchange yesterday.
The Peninsula
