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Petronet LNG Ltd
Earnings Call Analysis
Q1-2025 Analysis
Petronet LNG Ltd
During the first quarter of FY 2024-2025, Petronet LNG's Dahej terminal performed exceptionally well, achieving a throughput of 248 TBTU, a significant increase from 219 TBTU in the previous quarter and 217 TBTU in the same quarter last year. This represents a growth of nearly 13% quarter-over-quarter and 14% year-over-year. The terminal operated at an impressive 109% capacity utilization, which is a notable improvement from 97% in the previous quarter and 96% in the same quarter last year.
The company achieved its highest-ever first-quarter Profit Before Tax (PBT) of INR 1,520 crores, marking a 53% increase from the previous quarter's INR 996 crores and a 43% rise from the INR 1,062 crores recorded in the same quarter last year. The Profit After Tax (PAT) for the current quarter stood at INR 1,142 crores, up 65% from the previous quarter's INR 738 crores and 45% higher than the INR 790 crores reported in the same quarter last year. This robust financial performance was driven by higher throughput, stable LNG prices, efficient terminal utilization, and operational efficiencies.
Looking ahead, Petronet LNG is optimistic about the rest of the fiscal year. The company is focused on expanding its petrochemical projects and enhancing capacity at the Dahej terminal. The expansion is expected to be completed by March 2025, bringing the total capacity to 22.5 million tonnes. The CapEx plan for FY 2025 is set at around INR 3,500 crores.
The company reversed a provision of INR 63 crores related to Use or Pay (UOP) charges due to higher volumes brought in by customers. This revenue was booked at the current year's tariff, which is higher than the tariff for which the UOP was originally booked in 2021 and 2022. This adjustment contributed to higher revenues and reflects the company's efficient handling of customer volume commitments.
Petronet LNG is making significant strides in its capacity expansion and petrochemical projects. Contracts for key components of the petrochemical project have been awarded, and environmental and other clearances are in place. The company plans to complete the Dahej terminal expansion by March 2025 at a low CapEx of INR 570 crores. The overall CapEx for FY 2025 is projected to be around INR 3,500 crores, with a significant portion allocated to the petrochemical project.
The demand for LNG continues to grow, driven by moderate LNG prices and higher consumption. The utilization level for the Dahej terminal is expected to remain high, supported by strong demand from sectors such as power and industrial use. The company is confident that the moderate LNG prices will sustain high utilization levels and drive further growth.
The Dahej terminal's utilization level reached an impressive 109% during the quarter, with plans to maintain or even improve this level despite potential fluctuations. The company's commitment to operational efficiency and strategic capacity expansions are expected to support sustained high utilization levels.
Petronet LNG is actively engaging with offtakers to secure long-term commitments and additional cargoes. Discussions are ongoing for capacity bookings at the expanded Dahej terminal, and the company expects to finalize agreements soon. This proactive engagement is aimed at ensuring maximum capacity utilization and securing stable revenues.
Overall, Petronet LNG delivered a strong performance in the first quarter of FY 2024-2025, marked by exceptional operational efficiency, robust financial results, and a strategic focus on capacity expansion and customer engagement. The company's outlook remains positive, with plans to capitalize on growing LNG demand and maintain high utilization levels at its terminals.
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Ladies and gentlemen, good day, and welcome to Q1 FY '25 Earnings Conference Call of Petronet LNG Limited hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. S. Ramesh from Nirmal Bang Equities Private Limited. Thank you, and over to you, sir.
Good evening, everyone. On behalf of Nirmal Bang Institutional Equities, I have great pleasure to invite you all to this earnings conference call with the top management of Petronet LNG. Let me first congratulate the management on the results.
And we have with us the Director of Finance, Mr. Vinod Kumar Mishra; Rakesh Chawla, Chief General Manager and President, Financial Accounts; Gyanendra Kumar Sharma, Group General Management and President Marketing; Vivek Mittal, Chief General Manager and Vice President, Marketing; Debabrata Satpathy, General Manager, Finance and Accounts; and Mr. Vikash Maheswari, Deputy General Manager, Finance and Accounts. So over to you, Mr. Mishraji, for your opening remarks, then we'll have Q&A. Over to you, sir.
Thank you very much. So I'll start my brief on this result -- Q1 result of 2024-'25 during the quarter ended 30th June 2024, Dahej has performed exceptionally well, and the throughput has been 248 TBTU as against 219 TBTU in the previous quarter and 217 TBTU in the corresponding quarter.
If you look at the growth, it has witnessed a growth of almost 13% from the previous quarter and 14% from the corresponding quarter. And if you look at the Dahej performance overall, it has been 109%, which is significant because we have rarely seen in the past almost 1 and 2 years this much of utilization.
So we are happy to inform you that we have operated at 109% this time in Dahej as compared to 97% in the previous quarter and 96% in the corresponding quarter. And if you look at the overall throughput of the 4 terminals, then you will find that it is 262 TBTU as against 234 TBTU in the previous quarter and 230 TBTU in the corresponding quarter. There is a growth of 12% from previous quarter and 14% from the corresponding quarter.
And if you look at the financial results, the PBT this time has been INR 1,520 crores, which is ever highest in the first quarter in the history of PLL and as compared to INR 996 crores in the previous quarter and INR 1,062 crores in the corresponding quarter. So there is a growth of almost 53% from the previous quarter and 43% from the corresponding quarter of the previous year.
And if you look at the PAT, it has been INR 1,142 crores in the current quarter as against INR 738 crore in the previous quarter and INR 790 crores in the corresponding quarter of the previous year. And the growth has been 65% from the previous quarter and 45% from the corresponding quarter.
So this is the result, which is substantially good because we have performed very well as compared to previous quarter and corresponding quarter. And this has been possible -- this has been possible because of higher throughput and robust financial and owing to the stable LNG prices and better utilization of the terminal and efficiency in the operation.
So this is all from my side. Now house is open for the questions.
[Operator Instructions] We have our first question from the line of Probal Sen from ICICI Securities.
First of all, congratulations for a strong set of numbers. I had a couple of questions. Firstly, with respect to the UOP, the INR 63 crores of provision that has been reversed. Just wanted to understand, is that the incremental revenue booked because of higher volumes taken to settle the UOP obligation?
INR 63 crores has been reversed because we have got the equivalent volumes from the consent customer. And we have earned more than that. You can say because the tariff in this year has been higher than the tariff for which the UOP was booked in 2021 and '22. So we have received higher revenues because they have brought the volume.
And accordingly, as per our settlement mechanism, we had to reverse the use or pay charges of that year. To the extent they have brought the volume in current year. Because for 2021 UOP charges, December '24 is the last year. Last month, in which can be completed, up to which it can be done. So -- and for '22, it is December 2025.
But any customer can bring in the volume even earlier than that. So that is a ceiling limit. So accordingly, one of the customers has brought in the volumes. And accordingly, that amount of UOP has been reversed. But more than that, it has been booked as revenue in the current year.
So sir, if I may ask a follow-up. In terms of the third-party regasification volume, which has gone up to 144 TBTU of that, how much would be this incremental volume brought in as a part of the settlement? Is it possible to segregate that?
Yes, I can give you, but you are right that there have been almost 144 TBTU of this figures out of this 262 and around 11 -- 11 points some TBTU is there, which has been brought in by one of the customers.
So even excluding that, the normal run rate is still much higher than the previous quarters because of the moderate LNG prices and the higher demand. That's a fair way to look at it, right?
Yes, true. Very true.
Okay. Sir, secondly, with respect to -- I'll just have one more question with regards to CapEx plans. If you can kindly refresh us in terms of both the progress on the petrochemical project, and the capacity expansion projects that are going on with the timelines and the investment plans for the next couple of years?
Okay. So first, you are asking for petrochemical budget. So that we are progressing very well and certain contracts has already been awarded, like we have awarded the contract for licenses.
And for both the plants, PDH and PP both. And apart from that, we have also awarded the contract for P&C. Engineers India Limited has been awarded the job for carrying out this project. And this is the -- these are the 2 major contracts which have been awarded.
And apart from that, other clearances have already been received like environmental clearance and clearance, all are there in place. So there is no issue as such for starting the project. And the CapEx plan, as you are asking, normally, it is difficult to give beforehand something like that. But still, we can assume like 20% we can do in first year. And like that, 30%, 40% second year and third year, maybe a little bit higher.
So we will tell you exactly at that point of time. But as of now, the work has started, and the license has already started working on these packages. Our consultants, [ PLL ] has already started working on the packages. The work is going on, and we will slowly give you the details. And apart from that, as I have earlier also said that there has been a debt-to-equity ratio of around 70 to 30, so we are also lining up the lenders for giving that debt as and when required.
So we are processing that maybe within 2, 3 months, 3 months maximum. It should be in place. So as of now, we can say that there is good progress in the project. And apart from that, you have asked another question regarding capital expansion plan of Dahej terminal. So that is going on very well. And by March '25, we expect that expansion to be completed. That means that the total CapEx by that time will be around INR 570 crores.
So this is the CapEx. It's a low hanging fruit. If you go for a greenfield LNG terminal like this, it will be having a CapEx of around INR 5,000 crores. So it's only 10% of the cost, and we hope that this will be completed by March '25. This is our date deadline for that. And we will update you if there is any change, but we have this date as a completion date.
So just to be clear, sir, by March '25, then we will have the full 22 million tonne capacity available?
Yes, yes, 22.5 million tonnes.
We have our next question from the line of Hemang Khanna from Nomura.
Congrats on a great set of numbers. Sir, my first question is regarding the current utilization as well as the Dahej terminal, could you please help with that number? And secondly, what is the overall inventory gain and trading gain we earn in this quarter?
Okay. So we have asked overall percentage, I have told you 109%, and the inventory gain is INR 261 crores this quarter and trading gain is trading margin, which we have got is INR 58 crores.
And sir, utilization levels in this month would be what after the quarter has concluded?
Utilization, I don't exactly have, but this is not required, but it's still -- we are doing good. And perhaps we should do well also in the second quarter. But exactly, if you ask day-to-day changes. But you can say around 100% is there.
We have our next question from the line of Kirtan Mehta from BOB Capital Markets.
Basically, in terms of the -- do we have the visibility on are there more buyers who are coming back for this makeup cargo? Do we have a plan communicated from the company customers about the pickup in Q2 or Q3?
I couldn't actually get the question. Just can you repeat it?
One of the customers, the way you said it has picked up the makeup cargoes during the Q1, is there -- are there any more customers, who have communicated to us plan about makeup for the Q2 or Q3?
What's happening actually there is some annual delivery plan. There's already ADP for this particular contract. So some of the -- most of the offtakers are still competing their annual delivery plan. So what's happening that [Technical Difficulty] plan, which they have already communicated us. So most of the customers like GAIL, IOCL, BPCL, GSPC, Torrent they are still fulfilling their annual commitment.
So unless until they complete that there cannot be additional volume being brought by them. But slowly, we hope that maybe after September, they should bring some additional cargoes. But I think by September, they should be able to complete the annual delivery commitment. So hopefully, we should get in the third quarter, I think, for those customers. But one of the customers who was basically -- so I think one of the customer, he didn't have any annual commitment. So that's why he bought whatever volumes they have brought in, it has been adjusted against the use or pay charges.
Understood. Sir, just a follow-up on the same. So what I understand is roughly, we had around 4.3 million tonnes under this use or pay commitment where customers could approximately bring that amount. On this [ 4.3 million TPA ], if customers choose to bring them amount, effectively, we'll be charging only the differential ReGas tariff and that would accrue to the margin, not the full tariff. So is that the right way to think about this volume?
Yes, you can say because what's happening, we have booked use or pay charges at the tariff, which was prevailing at the time in year 2021 and '22. But when they bring volume in '24, naturally, there is a hike of 5% every year, recording that differential will be there that we'll be charging. And -- the balance, we are writing off that amount. So you can say literally that whatever we are booking is the differential of the tariff over '21 and '22 in the current year.
Just 1 more question on the volume side. With the sort of the Dahej terminal not working through monsoon, so some of the cargoes will get redirected to us. So how much additional cargo that we will expect during Q2?
This data, we cannot tell you right now. But of course, in the results for the second quarter, we'll come back to you on this issue. But I can only say...
It is somewhere in the range of around 10-odd cargoes, 10 to 12 cargoes that we normally receive. Is that sort of a fair way to understand this?
No. I cannot say anything like this. Unless I have got some commitment from somebody, I cannot give you because spot cargos never come like this. Any day a phone will come, and then we have to give a slot and they come. So it's not easy to say, predict anything that whomsoever is coming.
Great. And one more question on the sort of the demand outlook. Recently, Reliance on their call mentioned that they have tried minimizing their LNG usage to 0 after sort of the pickup in the LNG prices to about $12. Similarly, I think the power demand was very strong in May, but corresponding the peak power demand has sort of gone down. So will we sort of our volumes in Q2 will be sort of at a modest level compared to Q1?
No, no, I don't think so. This is a hypothetical question, but I can only say one thing that in this second quarter also, the whole will not be running. So only solace is that at least we will have sufficient cargoes because [ Davol ] will not be operating until almost September. So I think -- so it should be good quarter, second quarter. Other things you are saying is just hypothetical, I should not say anything on those things.
Right. Just follow-up on the CapEx part as well, which probably earlier asked, would you be able to share with us your CapEx target for FY '25 specifically?
CapEx? Okay. I will let you know. I just -- I can just give you. This year's CapEx target is around INR 3,500 crores.
And indicative breakup across different packages?
I will give you, but I will have to get it. I've just told you what I just understood, but we can give you, but exact amount, how much in each project will have to be seen. So we can discuss you later, you keep it. I've told you the CapEx, which could be there. But I don't say how much will happen. It's not an easy target, but we have [ challenges ].
[Operator Instructions] We have our next question from the line of Sabri Hazarika from Emkay Global.
Congratulations on good set of numbers. I have 2 questions. So first is, I mean, the adjustments for this quarter would be what I mean other expenditures, I think they went up significantly. So that could be something like INR 128 crores. Is that right, the change in provision between Q4 and Q1?
Yes. Probably INR 129 crores is the provision for use or pay charges that we create are an accounting prudence. Apart from that, the INR 63 crores that has already been discussed the reversal.
INR 63 crores is part of revenues right now?
No, no, no. It is since it is a reversal, it is part of the other expenses. So INR 63 crores plus INR 129 crores of provision. It comes to about INR 292 crores. If INR 292 crores is taken up, then the quarter is in line.
Okay. You're saying INR 63 crore also is part of other expenditure?
Yes, yes.
Okay. Okay. Got it. Got it. So that is first and second is the second the usual, I think retail service income is how much and what was the Q1 CapEx?
Q1 around INR 300 crores.
INR 300 crores of Q1 CapEx and regas service income?
Regas service income is around INR 851 crores.
We have our next question from the line of Somaiah from Avendus Spark.
The first question is on the Dahej expansion. Any update in terms of back-to-back contracts that in case you have signed anything? What is the expectation there? And also what is the kind of utilization that we are looking for next year once it is kind of complete?
We are still in talks with the offtakers, and we are expecting that some capacities will be booked by next year. And because this will be in operation by March '25, so literally, it will be available for the next financial year. So this financial year is ruled out, but next financial year definitely, it will be there.
And we are still in discussions with [ Optical ]. As soon as there is any update on that, we'll tell you. But one thing I can say that in fact, certain times, we are receiving some constraints in giving the slots. But after this capacity expansion, we will have sufficient flexibility to allow the cargo even have more short term and spot cargoes from the next year.
So that will be a for us, and we will be having a good throughput after that. And -- but of course, we would like to get the capacity booked before next year so that it is in place and maximum capacity is utilized.
So anything in terms of your expectations for utilization of this capacity next year or say 1 year later, to what extent 60%, 70% utilization is something that we can expect on this additional capacity?
See, it's like this that capacity, 5 mtpa is being expanded at a very low CapEx. It's hardly INR 570 crores. Now if you look at the payback period, it will not be more than 2 years, 3 years. So it's a low-hanging fruit. We have done the expansion. And as and when we get the capacity booking, definitely, we will be letting you know.
But only thing I can say that we are not worried about any underutilization because since the volume is increasing day by day and more imports are there. And there is no likelihood that LNG prices will be too high in the near future because so many capacities are coming. And apart from that, Europe is having sufficient inventory level of almost 81%. So all those factors are there, which are conducive to the price being moderate. So that is going to be there. So we are hopeful that capacity will increase, so definitely. The hays will have the substantial share of that increase in the volume in countries for presumption.
So we are quite optimistic about that. But you are right that as and when we get the capacity booking, we will let you know. But we are still in discussion. So we cannot give any premature comment on that.
Understood. Sir, also you mentioned this year CapEx wanted to be around INR 3,500 crores. So what is the outlook for the next couple of years? Would it be a similar number? Or will there be a step-up because of Pet Chem at some point in time?
Yes, Pet Chem will pick up next year, definitely this year, it may not be too high, but next year and then again, next to next year will be higher. But again, I have said that we should not be worried because we are having a debt-to-equity ratio of 70%-30%. So we are tying up with the lenders for this project, and we may be tying up to the extent of almost INR 10,000 crores, INR 11,000 crores or maybe more than that INR 12,000 crores.
So as and when it will be required, we will utilize those limits with the banks and use it. And the cash as far as the cash is concerned, we shall be having only 30%. So hardly it will be -- to the extent of INR 20,000 crores project is there, is the hard cost is only INR 16,000 crores. So I think hardly 4,000 to 5,000 will be used from the equity and balance maybe from the debt.
So I don't foresee any challenge as such. And CapEx will be higher in the next year, more than the current year because then Pet Chem will be having a project -- higher project activities over there. So I think this year, it may not be too high, but next year, it will be definitely higher numbers.
Got it, sir. Sir, this -- the current quarter provision of INR 130 crores is likely to be the run rate for the next 1 or 2 quarters based on your earlier provision for formulas quality?
Yes, yes. It's based on the provisioning because INR 129 crores has been booked as provision for the quarter. We are booking this credit loss for each quarter based on our formula. We have discussed earlier also. So it is that part, INR 129 crores, provisioning is done. INR 63 crores, as I just said, there's a waiver of use or pay charges for one of the customers. So total INR 192 crores, we have taken the hit in the profit and loss cost.
We have our next question from the line of Yogesh Patil from Dolat Capital.
And first of all, congratulations on the good set of numbers. If we calculate the amount of receivable that has reduced by INR 45.5 crores sequentially. But at the same time, sir, the company has waived off INR 63 crores. Sir, as per our understanding, the amount of receivable reduced should be the same the waive off amount. Please correct me if I'm wrong.
Yes. Not like this. So the receivables, actually, we have a consistently creating provisions also against the receivable. And this INR 63 crore waive off that has been done that -- That is done -- actually, see, you cannot directly correlate with the receivables, how much is the receivables are quarter-to-quarter because at the end of any quarter, there could be multiple reasons contributing to the receivables basically. The billings and the open billings done. So that cannot be correlated as such that it will go down only by INR 63 crores. So -- but then if we track the -- basically the entire use or pay sector, yes, the receivable has come down.
Okay. So sir, my second question, considering the calendar year 2024, already the 7 months are over. Can you give us an idea about the volume taken by the offtakers are as per the contracted quantity or lower than the contracted quantity for the 7-month period of calendar 2024 years. Just an idea.
I'll just give it to my colleague, Mr. G.K. Sharma, CGM Marketing.
Volumes. I'm Gyanendra Sharma. Volumes are going as per the ADP, and we don't see any issue in that.
So we don't see any shortfall at the end of calendar year 2024?
That will consider in the year end.
But our expectation our is like that.
We have our next question from the line of Nitin Tiwari from PhillipCapital.
Congratulations on very good set of numbers. Sir, I had a basic gap in my understanding around use or pay, so please, let me understand over here. So first of all, like the use or pay that we report, that is in rupees crore terms. So when the offtakers are setting off the use or pay. Are they setting off in volume terms or they setting up in revenue terms? So because you have lost revenue...
It is in terms of volume.
But shouldn't it all be in the terms of revenue because you've lost revenue, right? I mean no matter what volume is brought in if your revenue is fulfilled, that should be making it good, right?
Right. Because we are booking revenue as far as prevailing tariff, ReGas tariffs. So that is higher than whatever a use or pay charges was -- it in 2021 or '22.
What I was trying to understand is that your -- the revenue that we have lost, if that is made good, I mean, by bringing in of incremental volume, that would suffice the condition for fulfilling of use or pay charges. So why is that like that the offtakers are made to bring in incremental volumes at a higher tariff now, say for like there's a higher revenue recognition versus the regional UOP charges being lower, because it's revenue that you have launched in CY '21 and '22 and '23. So I mean as far as long as that is made good, irrespective of what volume is brought in that should be the sufficient condition, right?
Yes. They are bringing in the default volume that should be sufficient condition and only thing is revenue is good as of the current applicable tariff, ReGas tariff. So it's the volume which is more important. And this is the condition as per the settlement agreement that they should bring in the defaulted volume over and above the annual delivery commitments, which they have already made in the beginning of the year.
Okay. All right, understood. So -- and secondly, on the same point, so in this quarter, other expenses. So when we are making a provision, that is also part of other expenses, but when we are reversing our provision, that is also a part of other expenses. So I mean, help me understand that accounting? I mean how is that working?
Nitin, this is a reversal of revenue, not provision. See, we have booked the revenue regarding use or pay charges. And let us clarify that this was in the nature of liquidated damages at that point in time. So liquidated damages cannot be setoff by future obligations or anything.
So whatever they are bringing in the future, like somebody has brought in this current quarter that revenue is booked separately, and we correspondingly as for the settlement agreement, we are giving you a waive-off that revenue booked at that point in time. So this [ INR 3 crore ] is a waive-off revenue -- reversal of revenue actually.
Understood. So this is the revenue that we had booked in the past and because we have not received it, now we are putting that in the expenses and we have already received the new basically revenue that has been brought in by incremental volumes.
So whatever additional volumes have been brought, these are booked as current year revenue. There is no differentiation. But we are making a reconciliation that how much is the annual delivery commitment and how much they have addition brought in. Accordingly, we are making adjustment in the old use or pay charges. To that extent, we are writing it off in other expenses.
Understood, sir. And sir, second question is actually a bookkeeping one, if you can give us the Ind AS impact in this quarter for the gross margin and depreciation, interest, et cetera.
And IND AS impact is INR 22 crores as compared to INR 16 crores in the previous quarter and Q1 of the previous year.
So this is at a gross margin level you able to see it?
Gross margin level INR 161 crores positive. Then at the other expenses level, INR 10 crores positive, and there has been a loss of minus loss of INR 1 crore, ForEx loss, then depreciation, INR 83 crores and interest itself INR 64 crores. So net impact is INR 22 crores positive at the derivative level.
Sorry, depreciation, you said INR 83 crores and interest is 64 crores?
INR 64 crores.
We have our next question from the line of Raj Gandhi from SBI Mutual Funds.
Sir, just any clarity that you can give on the take-or-pay contract with the offtaker, which was to be signed along with the Qatar contract revenue?
Yes, we are still in discussion. But all as and when there is the final agreement with them, we will let you know, but these things are going on. But they have already committed that because when we signed, they have assured us that they will take it and some terms and conditions are there, which are being finalized after finalization of terms, the agreement will be signed. So we'll let you know that later on, but it still it is going on.
Sure, sir. And just one clarity. Let us say if on whichever terms if, let's say, minority are not okay with the tariff or whatever? And because this 7.5 million tonne contract with offtakers comes for voting, so let us say if for whatever reason if the minority is not okay and they vote against, then the tariff will have to be reviewed again in that.
No, I do want a question about it. It will not happen. We don't expect such kind of thing. And of course, the tariffs will not be so low that shareholders will not go, the numbers will not go. So we will ensure that shareholders' interests are protected while determining the tariff. So it should not be like this, it's a one-sided contract. It cannot happen.
Sure. But factually, majority or minority will be required to keep extending that 7.5 million tonne contract? Annual approvals from minority will be required?
Yes, it is every year, we are seeking both from the shareholders, so they will be required to vote on that because one of the material related party transaction, and it's a back-to-back contract. So there should not be any challenge for anybody. In fact, it's assured business for the next 20 years after 2028.
So I don't foresee any challenge for that. But as far as the tariff is concerned, we will ensure that, that is adequate -- and certainly, we will protect the interest of the shareholders. It should not happen that it's one sided and offtakers may do something else. No. It will not happen.
We have a follow-up question from the line of Kirtan Mehta from BOB Capital Markets. As there is no response, we will move on to the next question. We have our next question from the line of [ Deepan Manana ] from [ Avi ] Investments.
Just wanted to ask the sales receivables use or pay, which is subject to the settlement of disputed amount. If I look at the total dues were worth close to INR 1,800 crores, out of which you have already provided close to INR 500 crores. Now when I read that your results, it says that the bank guarantees for the calendar year '21 and '22 has been received. One, what is the update on the bank guarantees for the calendar year 2023?
First of all, I would like to clarify here that this settlement mechanism was approved by the Board for calendar year 2021 and 2022. And we have received the bank guarantees to the extent of INR 378 crores for '21 and INR 798 crores for the calendar year 2022.
As far as the use or pay charge of 2023 is concerned, these are outstanding and we are pursuing the offtaker to pay it. We are not going for any settlement mechanism as of now, as was done for '21 and '22. Because in those years, there was an issue of COVID and there was demand destruction in that period.
And again, 2022 is the Ukraine-Russia war, which has caused kind of price hike, price has gone -- abnormally higher. So because of that, we have taken that consideration and we had given this settlement mechanism. But 2023 is a normal year. So we don't foresee any kind of relaxation in that. So we are expecting that they should be paid by the offtakers.
So would the understanding be correct in the coming quarters in the next 2 quarters, we don't accept any fresh provisions to be made for this old deals?
Provisions will be done, it's a accounting aspect. We'll continue to make the provision because payment until it is realized, provision will continue. As per the time-based provision we are making. So accordingly, it will continue. But the only thing is that at the same time, we'll continue to pursue our payments from the offtakers. So that if we get it in the meantime, then perhaps it will not be required to have the provision for those deals.
And just one more thing, in terms of count of number of customers, how many customers are -- what is the number of customers that the amount is distributed with?
Customers our number is 5 -- 5 customers. These are long-term capacity holders.
Okay. The last thing -- and the INR 63 crores, which you have waived off this year, does that tantamount to completion with that customer? Or is it still an open customer?
It's still some volume is remaining. So we will bring some more volume.
We have our next question from the line of Hardik Solanki from ICIC Securities.
So as we have received a bank guarantee for CY '21 and '22, so we are expecting that even though they are unable to give the volume or come up with the additional volume we can enter this time guarantee, right? So there should be a reversal of provision whatever we have made for the year. And if they don't pay, we can encash it, right?
Absolutely, correct.
We have a follow-up question from the line of Sabri Hazarika from Emkay Global.
So regarding the Pet Chem projects, so this ethane propane handling part of this business. So this is -- this will be done through that third jetty only, right?
This will be done through third jetty because that jetty is having the facility for propane, LNG as well as ethane. So it will be handing all 3 products, liquid products.
Okay. And it will be like a utility business, where I think...
It will be like a utility business, tolling business like LNG, regasification.
Okay. And last question, Gorgon volumes in Dahej that number...
Gorgon volume in Dahej, just a minute. Gorgon volume in Dahej to the extent of 5.22 TBTU.
We have our next question from the line of Vikas Jain from CLSA.
I would just maybe ask so -- about 11 TBTU is what you have said has been adjusted in this quarter. What is -- what was adjusted last quarter, if you could remind us the total of how many TBTUs have been adjusted?
You are asking that how much TBTUs were default and how much has been brought at this point?
You said something around 11.5% or something 11.3 or something.
Yes, it says we got in till 30th of June. It has been brought in, and we have a...
That was in this quarter, but there was more, which was done last quarter as well, right? That is the March quarter?
No, no. This quarter, they have got it.
Okay. So of the total remaining, only about 11 TBTU has been adjusted till now, till 30th of June, right?
Yes, 11 TBTU.
Okay. And so just to understand this INR 127 crores or something, are we mentioning this -- it will be easier for us if it is mentioned somewhere in the provisions or something? Am I missing it because the number that you carry, that is not exactly INR 63 crores, I understand you mentioned. But this provision number versus the number that you say in terms of accounting, there is some difference. So this number for provision.
Yes. INR 129 crore you are asking about?
Yes, INR 129 crores...
So your number must be coming around INR 141 crores, INR 141 crores, INR 142 crores, against this INR 63 crores, actually, we had already created a provision of INR 13 crores. And that has been also reversed. So the reversal impact is -- the net impact is INR 129 crores.
I understand. So if we could mention this separately in the notes, that is something which could...
You see, this is not only a single reversal, basically, there could be some cash reversal also. So it will be really complicated for the general shareholders to understand if we make that in the note. But this is the right forum to explain all this.
Okay. Okay. I got it. So basically, this -- that's what you were saying the INR 192 crores is what is bloating the other expenditure. As against that, so this INR 63 crores would roughly more or less be linked to 2021? Or is it linked to 2022? Because the...
'21 and '22 and some part of '22.
Both.
Okay. Okay. Okay. Because the receivable number that you mentioned, the receivable as in the receivable under use or pay, that has come down about, I think, about INR 50 crores also for '22 only. So there is some change there also on. I mean...
There was the adjustment actually INR 63 crores, minus INR 30 crores...
Okay. That INR 30 crores in [ 11, 12 ]...
That is INR 49 crores around.
Okay. Understood, sir. And so just one, the INR 261 crores is what you mentioned as the inventory gain number, right?
Yes, yes.
So INR 261 crores, that's roughly equal to almost about 17%, 18% of the PBT. It's a pretty high inventory gain number, right?
Yes. Because of the LNG prices have gone higher as compared to the previous quarter.
There was clearly a very big shock. So that's largely a one-off kind of a move that has happened.
It was $9.5. It was $9.5 last time. It is around $11.5 at this point of time. So there's a difference -- $2 difference is there always.
We have our next question from the line of Chetan
Phalke from Alpha Invesco.
Sir, I just wanted to understand a few things on the macro or the big picture outlook on the demand side, especially in the Gujarat region. I mean, what would be the demand and supply situation, given the fact that even Swan is talking about their operationlizing their Jafrabad facility, and we are planning to double it from thereon. So how should we see this entire utilization and demand scenario on West Coast and particularly in Gujarat as well?
See, we are not concerned with anybody else, let anybody start the concern. It doesn't matter. We have our commitment on a long-term basis. If you look at the long-term commitment and Dahej, it is almost 15.75 MMTPA. It is 7.5 is our own this [ ReGas ] volume and then balance 8.25 million tonnes is capacity booking.
So that part is insured. And apart from that, whatever short-term cargoes, additional cargoes, forward cargoes are coming, so that is making our tender utilized at 109% in the last quarter. So this is what I'm saying, so I am not concerned about other tenders being utilized because there's another issue of connectivity. Our terminals are not so well connected as Dahej.
If you look at the evacuation capacity here, we have almost 5 lines, which are connected to the Dahej terminal. And the evacuation capacity is to the extent of 35 million tonnes, whereas we have a plant of only 17.5 million tonnes as of now.
So because of that reason, every terminal has a different geography and connectivity issue. It is not easy to evacuate the volume because connectivity is a big issue. So I'm telling you never compare -- let anybody come see the tenders, which has come in the vicinity of our power Dahej terminal. If you see Mundra how much capacities we use, you see Hazira how much capacity, 20%, 30%. So what I'm saying, it doesn't matter which terminal is coming up and which is going there.
But what we have, we have long-term commitment. Over and above, we have provided a short-term commitment also. So accordingly, we are utilizing. And that -- the reason behind that is why our Dahej chamber is suffered is the connectivity because it is very well connected with 5 pipelines. The evacuation is much, much easier for any customer.
Okay. okay. So how about the overall demand scenario utilizes on the Western coast? How do you see volume growth moving forward?
See, volume growth is already there. As I was looking at the data in the month of May, June it is around [ 213 I've seen ] MMSCMD, which is much, much higher as compared to 188 MMSCMD of volume in the previous year. You see the growth is there. Absolutely, no doubt because prices of LNG play a big role in utilization of gas in the country and prices are a little bit moderate, although it is around $11.5 a little bit higher.
But if prices remain in this range also, utilization level will be higher because people will use it. And if it goes down further, then perhaps demand will further enhance in the future. So what I'm saying that it's a good price still, and there is no expectation in the future that it will be going too high. So we hope that utilization level will continue to show up and this will be much, much higher in future.
Okay. Okay. So sir, recent fluctuation in capacity utilization is -- is it due to evacuation issues? Or is it due to the pricing issue? Where would you attribute it?
What you are saying in recent?
The recent fluctuation or recent downtrend in our utilization, is it due to the demand supply shocks or is it due to...
We cannot call it downtrend because I had said that utilization level was 109% in this last quarter. And if it is 100%, it cannot be always 109%, but it is not so low that you can say that it has gone down substantially.
It can pick up any time in future. So what I'm saying that the utilization level is optimum and maximum possible. And perhaps it will not come down from that level. This is our hope. And demand is continuing and the commitment is being fulfilled by the customers and bringing the cargoes.
So sir, what I was trying to understand was this fluctuation is due to pricing or the demand shock that's all I'm trying to understand?
Demand power sector, I've just told you that power sector demand was there exceptionally high in May and June because there was circular also in that connection. And because of that, the demand for power was increased. That has come down because monsoon has started now, and it is now spread all over the country. So power demand has come down. So this is the major reason that a little bit, it is down.
Ladies and gentlemen, that would be the last question for today. And I would now like to hand the conference over to Mr. S. Ramesh. Over to you, sir.
Thank you. So before we close the session, may I ask your thoughts on, one, the progress you have made on LNG as auto fuel for heavy vehicles. And secondly, what is your current reading of the potential for increase in utilization of Kochi terminal?
So small-scale LNG, although we are doing a lot of effort for that. As you know, that ssLNG is one of the projects, which was initially conceived by Petronet LNG Limited. And we had been doing it a lot and perhaps and this time, we have put up 4 LNG stations and all they are on the verge of commissioning. And it is along with 1 of the offtakers we have tied up and more LNG stations we are going to put up. But as you know, that potential is very high in this sector.
Once this factor is investigated, perhaps this will have huge consumption because if somebody is having a fleet of 200 trucks and they convert it to LNG fuel trucks. Perhaps it will be a huge benefit to the fleet owners as well as to the sector because LNG in any case will be around 15% to 20% lower in terms of prices.
And that is a big gain for fleet owners and it will help in also just citing this sector in future, and we can further propagate in other areas of the country because it's only showcasing something before the customers before the public that this is the benefit you are getting like it happened in the case of CNG.
So we are making all efforts, but it has huge potential. And we are hopeful that it will come in the near future, but we have started it, and we are talking to various fleet owners also. And more and more [ MCVs ] have come in this field. There now also want to put up some LNG stations. So we are also doing some LNG stations, but most of the LNG station will be put up by offtakers, and we will be happy in supplying LNG to these offtakers to their stations.
So this is our endeavor that more and more LNG usage should be done in future. So that will happen, whether we put up the LNG stations or it is put up by OMCs. So this is how we are going ahead. And second question, you asked about regarding...
The Kochi terminal?
Kochi terminal utilization. It is, of course, doing good. But the only thing is that, as I said in the earlier conferences also that connectivity with Bangalore will be there by next year, maybe March or March '25.
So I hope that once it is connected to Bangalore, then it will be connected to national gas grid. And then utilization will be much, much higher. But as of now, it is 20%, 25% I think, in between. So hopefully, it will increase once it is connected to the national gas grid because at that point of time, it can be utilized by any offtakers even for the domestic supply of gas to the city gas distribution project entities because the swapping of the gas is allowed.
So once this is connected to natural gas grid, anybody can sell domestic gas from -- by taking gas from our terminal. And through swapping arrangement, it can be compensated as well. So we are hopeful that city gas distribution entities will require more gas from our terminal because, again, it is the case, where if it is connected with the pipeline, it will be falling in the Zone 1 tariff. And as you know, that zone 1 tariff is the lowest of around INR 39.90. So anybody would like to be in that range. So it is not feasible even for any other supplier of gas like IOCL, GAIL to supply it from [indiscernible] once it is connected to a nearer source of gas like Kochi.
So it will be, in fact, cost efficient for the customers also. So we are hopeful that because of that reason that there is a unified tariff in place and it will be connected to the natural gas grid. There is a likelihood that in the next -- after for March '25, the capacity utilization will definitely increase. But we are hopeful it may reach up to 50%, 60% initially, and then it can enhance also.
So with that, we are closing the session. So may I thank all the participants for making this very interesting and the participative session. And I thank the management who was providing their valuable time in answering all the questions very patiently. Thank you very much, everyone, and have a good evening. Thank you.
Thank you very much. Thanks a lot.
Thank you. On behalf of Nirmal Bang Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.