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Partners to challenge tax audit

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Bermuda-based Höegh LNG Partners LP has reported net income of $2.6 million for the second quarter of 2021.

The floating liquefied natural gas service provider said that compares with net income of $19.7 million for the second quarter of 2020.

Operating income was $24.1 million compared to $27.7 million in the same quarter a year ago.

The Partnership reported limited partners’ interest in net loss of $1.2 million compared with limited partners’ interest in net income of $16 million in the second quarter last year.

It added that operating income, net income and limited partners' interest in net income were impacted by unrealised gains on derivative instruments for the second quarter of 2021 and 2020, mainly on the Partnership's share of equity in earnings of joint ventures in the second quarter of 2021 and 2020.

Excluding the impact of unrealised gains on derivative instruments for the second quarter of 2021 and 2020 impacting the equity in earnings of joint ventures, operating income would have been $24 million for the three months ended June 30 compared with $25.5 million for the three months ended June 30, 2020.

The Partnership reported total time charter revenues of $34.7 million for the second quarter compared to $34.4 million of time charter revenues for the second quarter of 2020.

It generated segment EBITDA of $34.3 million and $36 million for the second quarter of 2021 and 2020, respectively.

The Partnership said a tax provision of $10.9 million was recorded for a tax uncertainty for the potentially disallowed interest deduction following the conclusion by the Indonesian tax authority's 2019 tax audit.

The Partnership said that $2.7 million of the amount became payable in July, adding: “We disagree with the conclusion of the tax audit and intend to contest the tax authority's position.”

The Partnership also reported that the charterer under the lease and maintenance agreement for the PGN FSRU (floating storage and regasification unit) Lampung ("LOM") served a notice of arbitration on August 2 to declare the LOM null and void, and/or to terminate the LOM, and/or seek damages.

The Partnership said: “PT Hoegh LNG Lampung has served a reply refuting the claims as baseless and without legal merit and has also served a counterclaim against the charterer for multiple breaches of the LOM.

“PT HLNG will take all necessary steps and will vigorously defend against the charterer's claims in the legal process. Notwithstanding the NOA, both parties are continuing to perform their respective obligations under the LOM.”

The Partnership said it continued measures during the second quarter to mitigate the risks from the Covid-19 pandemic and ensure the health and safety of crews and staff, whose well being is the Partnership's highest priority.

It said there were no reported cases of Covid-19, and that there was 100 per cent availability of FSRUs for the second quarter.

Sveinung Støhle, chief executive officer, said: "Höegh LNG Partners' fleet of modern, full-size FSRUs once again achieved 100 per cent operational availability during the second quarter of 2021, generating a stable operating income in spite of the continuing challenges related to the Covid-19 pandemic.

“While maintaining this level of operational excellence across our fleet, we are highly focused on our pending arbitration and securing a near-term solution for the refinancing of the PGN FSRU Lampung.

“As always, the Partnership is truly grateful for the extraordinary effort and professionalism displayed by its seafarers during these challenging times."

Sveinung Støhle, chief executive officer
Höegh LNG Partners LP

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Published August 27, 2021 at 11:55 am (Updated August 27, 2021 at 11:56 am)

Partners to challenge tax audit

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