Promigas taps emergency loans as lockdowns rattle gas markets

Natural gas transporter Promigas has received approval from its board to secure loans and credit guarantees for its coronavirus-stricken businesses in Colombia and Peru.

In a filing with Colombia's financial services regulator, Promigas said it would seek a US$50mn credit line "with the entity that offers the best market conditions." 

The Barranquilla-based firm said it would also pursue financing options and submit compliance guarantees for Peruvian subsidiaries Quavii and Gasnorp. 

Quavii is seeking loans of up to 58mn soles (US$17mn) and will issue a compliance guarantee for up to US$20mn related to its concession contract.

Gasnorp will solicit up to US$46mn in credit and sign off on a US$2.4mn compliance guarantee.

Meanwhile, Cali-based distributor Gases de Occidente said it was authorized by its board to secure an 86bn-peso (US$22mn) credit line and a separate 25bn-peso financing facility from state lender Findeter.

The announcements coincide with plummeting gas consumption as lockdown measures throttle demand. 

Figures published by Colombian gas market operator BMC on Thursday showed gas consumption – which had already fallen sharply since isolation measures were introduced in March – slid another 3% in the first week of May.

Demand from thermoelectric power generators dipped 10% compared to the previous week, while refineries and households decreased consumption by 5% and 3%, respectively.

FORCE MAJEURE

In a sign of the stress being placed on market participants, BMC issued a statement on Wednesday inviting buyers and sellers to declare force majeure for their contracts. The document can be seen here. 

Last month, Promigas published a business continuity plan that addressed issues related to human resources, operations, finances, administration and legal matters.

The company said the initiative would ensure the well-being of workers and guarantee uninterrupted supply of gas and electricity to clients during the COVID-19 crisis. 

On April 27, the company said it restarted construction work on three pipeline projects, which had been suspended since late March as part of the mandatory lockdown.