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Petronet LNG Ltd
Earnings Call Analysis
Q2-2025 Analysis
Petronet LNG Ltd
In the recent earnings call, Petronet LNG reported an overall improvement in throughput across its terminals despite a quarterly decline. The Dahej terminal achieved a throughput of 225 TBTU compared to 210 TBTU in the same quarter last year but fell from 248 TBTU in the previous quarter. Combined throughput from both Dahej and Kochi terminals stood at 239 TBTU, showing favorable year-on-year growth, although it was lower than the previous quarter’s total of 262 TBTU.
For the quarter, Petronet LNG's Profit Before Tax (PBT) reached INR 1,140 crores, which is a modest increase of 3% from the previous year, while the Profit After Tax (PAT) was INR 848 crores, up 4% year-over-year. When looking at the first half of FY25, PBT surged by 23% to INR 2,660 crores and PAT rose by 24% to INR 989 crores, reflecting the company's solid growth trajectory and effective operational management.
Management expressed optimism for the second half of fiscal year 2025, with expectations of maintaining Dahej terminal utilization between 95% and 100%. They anticipate moderate LNG prices, which are currently aligned with long-term pricing, contributing positively to consumption levels. Seasonal factors, such as mild winters, are expected to help sustain these prices, boosting overall demand.
Petronet is actively expanding its operational capabilities. Recently, the company commissioned two additional storage tanks at the Dahej terminal, bringing total storage capacity to eight tanks. Furthermore, a regasification capacity expansion project, adding 5 MMTPA, is on track for completion by March 2025. This project represents a relatively low capital expenditure of INR 570 crores, anticipated to have a short payback period and will likely enhance revenues going forward.
Completion of a new pipeline connecting the Kochi terminal to the national gas grid is expected to enhance utilization significantly in the coming years. Management indicated that significant progress has been made, with half of the 250-km line already completed. Initial connections should bolster demand for LNG, allowing for better service distribution without geographical constraints.
The company assured investors of stable revenue streams from long-term contracts, emphasizing that demand from offtakers remains strong. Projected growth in LNG consumption in India and assured supply arrangements through contracts with various suppliers underline a solid demand outlook. Additionally, annual regas tariffs are expected to continue increasing by 5% as stipulated in contracts, providing a stable revenue framework.
Petronet is making strides in its petrochemical project, with work on critical contracting processes advancing. The awarding of contracts for project management and related services has commenced, indicating a methodical approach towards developing new revenue sources in petrochemicals aligned with their gas supply capabilities. The company is also solidifying its financial base to support these endeavors.
Given the expected increase in domestic gas consumption and limited domestic supply, the company's management expressed confidence that growth will predominantly stem from LNG. With substantial new liquefaction capacities projected to come online globally by 2026, coupled with India’s increasing reliance on imported LNG, the future appears promising for Petronet, potentially leading to robust consumer demand in both the residential and industrial sectors.
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Ladies and gentlemen, good day, and welcome to the Petronet LNG Q2 FY '25 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Krishna Gopal Mundra from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thank you, Riddhi, and good evening to everyone. On behalf of DAM Capital, I welcome all of you to Petronet LNG's second quarter FY '25 earnings call.
At the outset, I would first like to congratulate the management on the good set of results. And to discuss the same, we have with us the Director of Finance, Mr. Vinod Mishra; Mr. Rakesh Chawla, who is the Group General Manager and President, Finance and Accounts; Mr. Gyanendra Sharma, who is Group General Manager and President, Marketing; Mr. Vivek Mittal, Chief General Manager and Vice President, Marketing; Mr. Debabrata Satpathy, who is General Manager, Finance and Accounts; and Mr. Vikash Maheswari, who is Deputy General Manager, Finance and Accounts.
With that, I would now like to hand over the call to the management for their opening remarks, and then we will follow it up with a question-and-answer. Over to you, sir.
Okay. Thank you very much. Good evening to all of you. First of all, I would like to point out that Dahej throughput has been 210 TBTU as against -- 225 TBTU as against 210 TBTU in the corresponding quarter and 248 TBTU in the previous quarter.
If you look at the performance of the company this time, it has been better in the first half, also it is better than the corresponding quarter. And the overall throughput, if you see of Dahej and Kochi together, it's 239 TBTU as against 223 TBTU in the corresponding quarter and 262 TBTU in the previous quarter.
And if you look at the half yearly performance, it has been 473 TBTU as against 428 TBTU in the last half year H1 period. And overall throughput in 6 months has been 501 TBTU as against 453 TBTU in the first half of last year. So this is the physical performance.
As far as the financial performance is concerned, this quarter, the PBT has been INR 1,140 crores as against PBT of INR 1,102 crores in the corresponding quarter and, PBT of INR 1,520 crore in the previous quarter. And the PAT has been INR 848 crore in the current quarter as compared to INR 818 crore in the corresponding quarter and INR 1,142 crore in the previous quarter. So this is the quarterly result, which has been there.
And if you look at the half yearly performance, is INR 2,660 crore in this first half of current year as compared to INR 2,164 crore in the H1 of last year. And PAT has been INR 989 crores in this current quarter as compared to INR [ 68 ] crore in the corresponding half year of the last previous year.
So this is the financial performance and [indiscernible] the growth of profit from H1 of this year as compared to previous year H1. It is 23% growth is there in PBT and 24% growth is there in PAT. And as far as the quarterly performance as compared to the corresponding quarter is concerned, it is around -- PAT is higher by 4% and PBT is by 3%. So this is the physical performance.
And if you look at the utilization of Dahej terminal, it is at the level of 98%. And Kochi terminal is at the rate of 22% and 98% is, of course, less than last quarter, which is around 109%, and it is more than corresponding quarter, which was around 96% -- 92% rather in the corresponding quarter. So it is better this time as compared to the corresponding quarter. So this is how it is there.
And if you look the dividend payout, we have declared INR 7 peer share as dividend -- interim divided to the shareholders, and which is the same as it was in the last year.
So I think this is all from my side and now house is open for the questions.
[Operator Instructions] The first question is from the line Probal Sen from ICICI Securities.
I hope I'm audible.
Yes. Yes, your audible.
Sir, 2 questions from my side. One is, sir, of course, the Q-o-Q decline was perhaps to be expected given the reduction in power demand, what we have seen in overall consumption. But just looking ahead for the second half, what sort of utilization should we be sort of factoring in, given -- and what sort of Spot LNG pricing environment are we actually looking at, at this point of time?
Of course, I am optimistic about it and the second half, I expect it will be good also because demand is growing because prices are moderate at present. And it is likely to remain moderate, but I can't predict for the winter season, it may be slightly higher. But if winter is not that harsh, certainly the prices will also be lower.
And if crude also remains at this level, which is now at $75, $74, then long-term prices will be even down. So I think at present, if you look at the Spot LNG prices, they are almost neck to neck with the long-term prices. And there is not much difference in the prices of long-term and Spot LNG.
So we hope that prices will remain moderate in future, and we hope that it will be even lower than what is now. And hopefully, and I am sure that consumption will not be reduced. It will remain at the higher level because you know that Indian market is price sensitive. And if prices are moderate, then consumption doesn't come down.
And we are hopeful that consumption will increase in the second half also. And accordingly, we are getting sentiment that it should be almost in the same range. We are expecting that it should be in the range of 95% to 100% capacity utilization of Dahej. So this should continue. We don't see -- don't foresee any challenge.
Understood, sir. The other question was more about sort of the capital deployment. If you can just give us a bit of an update on what is the effective capacity that we expect Dahej to be at by the end of this financial year?
What is the update on the last mile connectivity of the Kochi-Bangalore, the second offtake pipeline?
And thirdly, the status of the petrochemical project in terms of CapEx and investment, if I can have some color on that?
Okay. So first is the CapEx you are asking. And as I -- I think we have already declared on the website and also on the stock exchanges that we have commissioned 2 tanks in Dahej on 1st of October. So that means that we are getting more flexibility to operate now. And we can now store more cargoes, that means it will be definitely adding to our bottom line.
So this is a great thing to happen because we are now able to have more cargoes, and this will give us flexibility to process more gas. So this is one good news for the shareholders that we have capitalized these 2 tanks and started storing LNG in these 2 additional tanks. Now total number of tanks have gone up to 8 something. So this is one CapEx which has been there, which h1as been completed.
Now another project which is going on in Dahej is our regasification this project, this expansion of our capacity by 5 MMTPA and which is likely to be completed by March 2025 as per the scheduled completion time. So if this happens, this will give us the flexibility and also will enhance the revenue of the company.
And accordingly, it will add to the bottom line, but it will be in the next financial year, not this because it's still going on by March, it will be complete. It is a low-hanging fruit, if you look at because it's a CapEx of only INR 570 crores, which is only 10% of the greenfield terminal at [indiscernible], it is envisaged today. So even if we are putting up this CapEx of INR 570 crores, maybe in a year or 2, we will recover it. The payback period is very short.
So it's a low-hanging fruit and then capacity will be there, 22.5 MMTPA. And we are making all efforts to book the capacity by the offtakers and anyone else if the offtakers are not taking full capacity. So that effort is going on. So this is one of the agenda we have.
And other CapEx part, if you look at Kochi pipeline. Third jetty is also being awarded -- has been awarded. So it is going on. Now that third jetty will take 3 years' time to complete. Topside facilities and balance facility, both the contracts have been awarded. So now it's a period of 3 years by which it will be completed.
And it will be able to handle both -- all 3 kind of liquid hydrocarbons propane, ethane and LNG. So it's a unique jetty in the country, which nobody has. So we are hopeful that this will be complete by 2027. This is one part at Dahej.
And then you are talking about Kochi. Kochi, basically, pipeline connectivity was an issue. And as I have reiterated in our earlier conferences also that it is likely to be completed by March or maybe April next year, as has been communicated by GAIL India Limited because that is the company which is making the pipeline from that -- for that section.
And as I said earlier also that Coimbatore to Krishnagiri section is going on. And half of that -- it's around 250 kilometer, half of that has been already completed, but I think 120, 125 kilometers is still remaining. So hopefully, that will be completed by year-end. So after that, it will be connected to the national gas grid.
So that is a major thing which is going to happen because after that, it can utilize the gas to any place and gas can be [indiscernible] for any other area. And if somebody want gas at Punjab or Haryana, they can be supplied from Kochi because physical movement of the -- physical movement of gas is not required. If pipeline connectivity is there and it is connected with the gas grid. So this is how it happens.
So this will automatically increase the consumption level of Kochi. And more and more city gas distribution projects are going to be completed in next 2, 3 years, 4 years maximum. So there also the demand will be increasing because domestic gas is allocated to city gas distribution companies, and it can be swapped with RLNG and it can be supplied from Kochi because, again, there is a benefit of unified tariff of pipeline.
Zone 1 tariff is there, then certainly anybody would -- in Southern Indian cities, anybody would like to have gas from Kochi terminals because that will be within the range of 300 kilometers. Zone 1 tariff [indiscernible]. So I think it will happen once this Kochi terminal will be connected to the national gas grid. So this we are expecting. And this will automatically raise the consumption or utilization level of Kochi terminal. So this will be your second question answer.
Third question is regarding petrochemical project. And that I just want to update that we have already awarded contract for PMC with the Licensor contract has already been awarded. And now contracts have been awarded. So PMC is now undertaking all the activities to make packages for different, different sections. And packages will be then awarded in separately and perhaps it has already started, in fact, making the packages.
And then testing will be started and the contract will be awarded to the vendors. And this will be -- I think this year, it will be taking place. But CapEx on this will be not too high this year, but maybe next year, it will be high. This year only, this processing will continue because awarding the contract also sometimes takes more time. So that is there and the progress I have told you.
And as you know that we are also lining up our lenders for this project, as we have already declared that the debt equity ratio will be 70-30. And accordingly, it will be lining up with the bankers, lenders and we have started the process. And probably in the next 2, 3 months, it will be lined up. And thereafter, we will be ready for making the payments and utilizing the loans from the bankers and also putting to equity of around 30% from our side. So this is our progress is there in petchem project.
The next question is from the line of Yogesh Patil from Dolat Capital.
Two quick questions. Sir, recently, the GAIL is seeking a long-term import to deals of closer to 5.5 MMTPA. And GAIL has also closed some LNG supply contracts of 1.5 MMTPA. So in this case, can we connect the dots that our Dahej expansion would be ready by March 2025. And so is there any chance that the GAIL will book some capacity or any talks going on this side? This is my first question.
Yes. agreed. And as you know that capacity will be available by March '25. And we are already in talks with our offtakers. But something concrete will be there; we will let you know. But at the same time, I can say that whatever new contracts are being signed by GAIL, IOCL all have signed it. Definitely, much more and more volume will come to Dahej.
This is quite sure because the Dahej connectivity with the demand center is so good that anybody -- whoever is bringing volume to India cannot ignore Dahej because it has a capacity of around 35 million tonnes of evacuation and it is connected by 5 pipelines. So no other terminal has got this kind of unique advantage.
So I am hopeful whatever volumes are coming, it [indiscernible] maximum volume will come to Dahej terminal also. And at the same time, we are also seeking our offtakers to book capacity under this expansion. And hopefully, we will succeed. And if that happens, then to some extent, it will be booked. Maybe that 5 million tonnes may not be booked, but we want to keep some capacity with ourselves also because as you know, even 17.5 MMTPA is sometimes falling short. And last quarter, we had to run almost nothing 20 MMTPA of capacity. We have run to that extent.
So I'm saying that whatever capacity we create, it doesn't mean if entire capacity is not booked, it will not be utilized. When we were only 17.5 million tonnes, and at that -- at this point of time also, the booking is only 15.75 MMTPA [indiscernible] level utilize the entire 17.5 MMTPA. So it's not that unless until long-term capacity, then only utilization will be ensured.
So the spot and short-term gas is also there in the country coming because prices are moderate, so we will be able to utilize that 5 million tonnes. So it is going to enhance our bottom line. So let's be assured that we will try to book at least some capacity with offtakers or any other consumers or any other LNG traders or supplier.
But at the same time, we have the capability to utilize this capacity with other volumes coming in like short-term, spot that is also there. So hopefully, this -- we will be utilizing next year this 5 MMTPA addition. So this will automatically add to our bottom line and profitability will increase next year.
Sir, second question is related to the Dahej regas tariff. Every year, we increase the tariffs by 5%. And as per the agreement with the promoters, who are mostly the offtakers at Dahej? How long we can continue to increase the Dahej tariff every year by 5%? That's one thing.
Is there any clause which can pause or it can change the tariff increase in long run? That's the second. And sir, we also wanted to understand the formula, if any, to calculate the Dahej terminal regas tariff? Is it based on some percentage of return on equity or the return on capital of Dahej assets?
Okay. So first question is that how long will continue to increase 5%. This is as per contract. See, it's not there that they have a choice because it has been agreed to. It's not in Dahej only. If you go any other terminal also, you do [indiscernible], you go other terminals, they are also charging 5% every year. So it's not a question that how long they will afford.
This is a contractual obligation and contract is there for the capacity booking till 2036. So till 2036, it will continue. So it's not a question of any clause which is there, which can -- yes, we can renegotiate it. It's not there as per contract, we are charging. This is the answer to first question.
And there is no -- second question also that there is no clause as such. Only thing we can review every 3 years that how much inflation is there. So it is only upward revision, which is happening. It is never the downward revision, which is going to happen. So this is my understanding of the contract. So -- and we are going as per the contract. So this is how it is there. And your third question is regarding.
So the third question was regarding, wanted to understand the formula, if any, to calculate the Dahej terminal...?
Formula, it cannot be discussed. This is something which we have to -- because these things are contractual and confidential things. We cannot give you the formula how we calculate it. But it is a market driven. And if you compare with any other terminal, it is the lowest tariff, which we are charging.
Sir, as you just mentioned that every 3 years, tariffs can be reviewed if there is any adjustment regarding to inflation. So any shortfall to the inflation, suppose the inflation is not going at 5% every year...
It has not happened so far.
Okay. And sir, last one, considering the last 10 months regas volumes at a Dahej terminal, do you expect any shortfalls on the offtaker for the current calendar year?
I don't think -- we don't expect these things to happen. And these are contractual obligations. We will consider if prices are moderate. so they will fulfill the obligations. We are quite hopeful.
Okay. And sir, lastly, what was the CapEx during the first half FY '25 and the planned CapEx numbers, if you could share for the FY '25 and '26?
CapEx, I have told you that it's going on, but details can be given, but I don't want to -- so I think we are going well on CapEx side and projects as it will be coming up. But certainly, we have had -- have some CapEx is going to happen in this year. And we will let you know later how much is that?
Okay.
I can give you the CapEx on which item we are going to incur. But financial year-wise, you say then it becomes difficult because it is still 6 months remaining for this financial year. That it happens, and we will tell you.
The next question is from the line of Hemang Khanna from Nomura.
Sir, firstly, margins for this quarter were a tad week. Could you help us with some details on what led to this? And what was the hit, if any, on the inventory and trading side? Sir, secondly, on value...
We have already declared that utilization is lower than the previous quarter because last quarter, there has been power demand and that was significant.
So utilization side is well understood.
It's a normal operation because we are operating -- so I don't see any and volume-wise, it is lower and margin that tariff is already fixed, so it is as per that company. And as far as the trading is concerned, trading margin has a [indiscernible] and there has been inventory gain of around INR 70 crores this quarter and against INR 261 crores in the previous quarter.
So inventory was INR 70 crore. And what is it on the trading side? Sorry I lost the line.
Trading side, I told you INR 39 crores this quarter.
INR 39 crore. Got it. And sir, secondly, if you could help us understand on the Dahej side, how are utilization currently panning out for the month of October? Definitely, you've indicated 95%, 100% for second half. But how is October currently trending?
Today's information 98% going or this should be [indiscernible]...
98%. That's what you're [indiscernible]?
So it will not be -- it will be in this range only. But exact data, October, we cannot give. [indiscernible] sensitive information. So we cannot declare on this concall.
Got it, sir.
But we will make an effort. It will be continuing in the same fashion, which is happening in this quarter -- second quarter in the range of 98%.
Got it. Got it, sir. That's reassuring. And sir, lastly, on the tariff negotiation side, can you just share with us when is the tariff negotiation expected to be concluded a rough time line on that? And what are typical hindrances, if any?
[indiscernible] talking about?
Sir on the new volumes that you signed.
New volume it's going on, it's already -- we had -- these things cannot be disclosed, because these are the confidential. This will happen, there is no challenge as such. We will be doing it, and it will be in a manner that will be good for the shareholders, I don't foresee any kind of lower tariff from their side. It will be good tariff. And we will let you whenever we sign the contract. But already this all things are going on. It cannot be discussed on this call.
The next question is from the line of Maulik Patel from Equirus.
So just two questions. Can you just give some update on your petchem expansion. I Mean work has started or the appointment of the consultant. So any update on this will be really helpful?
Just I mentioned petchem, we have awarded the work for PMC [indiscernible] one thing. Second contract, we have awarded the contract for Licensors also. So both PDH and PP contracts have been awarded. So these are in place. And now PMC has been awarded. So now PMC is now undertaking all the activities for standing the various packages. And then it will award the work to the contractors and then the work will start in Dahej.
So this is how it is going on. So major thing of award of work to PMC contractor, which has taken place. And now everything will start slowly, the packages will come. And because this is a petchem project, so multiple packages are there, and the contracts will be huge. So it takes time to award job. It's not one contract. It's many, many contracts will be there for different, different, utilities will be different and other units will be different. So likewise, it will be there.
But it has started. So we hope that this year, many contracts will be awarded. But CapEx may take some time because the work will start in the second half of the year. So I think the payments will not be too high. But next year, the CapEx it will be. And before that, we have been already engaging with our lenders. And probably in 3, 4 months period, we'll be able to line up the lenders for taking debt. As I said earlier, the debt ratio -- debt equity ratio is 70-30. So accordingly, we are going ahead.
Got it. Sir, just one more question, sir. Sir, in earlier question, you spoke lengthy about the renegotiation of the RasGas volume and the contract which you want to -- with an offtaker, right? So is it fair to assume that before 2027, you can -- what kind of time line you are looking to complete the negotiation with the offtakers for this new contract of RasGas? Because you have signed a contract with Qatar, but you have to do with offtakers. So when that is likely to get complete?
It will be completed very shortly. It's going on, anytime it can be completed. But honestly still there is a 3 years, 4 years period left.
Correct.
for implementation of this contract. So don't worry about -- it will be done before that. But only one thing I can assure you that they have already undertaken to take the quantities in this contract. This guarantee they have taken. So it is going to happen, but this period is long. So we are taking time, but it will be happening shortly. Maybe in 6 months' time, it may happen like that.
So there is no issue as such. So because there is no urgency of that contract, it may be taking place, but since the time is still left, 3.5 years -- more than 3.5 years. So I don't foresee any challenge. As I said that this volume is guaranteed by offtakers. They will offtake this volume. That means our revenues are guaranteed.
And it will be a reasonable revenue. It will be good revenue and perhaps shareholders will always -- has always appreciated us in terms of this kind of contract. And in future also, it will be like that. So I assure all the shareholders that this deal will be good, and there is no reason to obtain anything that what is going on -- because it's a long time is left, so it is taking time.
I think that is what the investors worried about. And let me tell you, we all know that the offtakers -- the offtakers will agree with the volume. So volume obviously and the price at which the volume is going to get come from Qatar to you, it has also been in consideration with an offtaker. What worries to the investors and others is it a nd regas tariff. And we are not concerned about revenue, revenue we'll get it. We're concerned about the gross profit.
This much I can assure you.
There will be -- no decline in the regas tariff, which you are charging? Will there be any decline in the regas tariff which you are charging to the customers, let's say, today INR 62 per...
Because nothing has materialized.
Sure, sir. Sure.
So I cannot give. But certainly, when it is finalized, then we'll come back to you and discuss this matter.
Sir, just one more question. And related to this expansion of Dahej, are you in a discussion or are you looking to find more volume to be placed on a long-term regas capacity, which you have done in the past? And currently, you have around 8 million tonnes of regas cap...
We are all -- first, making all efforts to have the capacity booked in our terminal because new volumes are coming up. And if you look at the total long-term contracts, which India has today, from supplies are coming is 20 million tonnes, 20.2 million tonnes. But by the time 2027, you will find that it is around 28 million tonnes.
So definitely volume will be coming to Dahej maximum volume. What I'm saying [indiscernible] 1.2 million will be starting from around 2026, '27 [indiscernible]. So as -- what I'm saying that future is very optimistic because gas utilization is bound to increase. And as the government of India focus is also to increase the share of taxes [indiscernible] to 15%. That's why there is a huge potential for growth of LNG business.
And if you look at different segments also, the transportation sector, it is also coming up in a big way. So this alone has a potential of consuming almost 10 million to 12 million tonnes. If it comes in the way -- the way the China has already implemented this ecosystem.
So I think in India, there is a huge potential for LNG consumption. And even existing sectors and more new sectors will come up, CGD entities will come up. So I hope that our LNG consumption will further increase because domestic gas availability is hindrance. It cannot be increased substantially. There is a limitation of domestic gas and consumption is growing.
So growth is only likely in LNG sector. Which is what it's a good thing for the persons like us or companies like us because we have hope that in future, because prices will not be high in future, reason being that more and more capacities are coming in 2026 onwards. So almost to 150 million to 200 million tonnes of liquefaction plants are coming up across the globe.
So the supplies are likely to be more than demand. Certainly the prices will not be too high. And if prices are not high, then LNG consumption in India is bound to increase. So this is an optimistic view.
Okay. Sir, just one bookkeeping. What was the regas revenue you charged in this quarter?
Pardon.
For the regasified revenue, which you charge to this regas volume service contract, how much it is...
Quarter?
Yes, this quarter?
NR 1,508 crores total trading and regas volume.
No, no, I'm talking about regas [indiscernible] between service revenue, sir.
Service is INR 731 crore.
INR 51 crores?
INR 731 crore.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
We have mentioned that we have reversed the previous book revenue of INR 71 crores. If the customer has brought the corresponding cargoes from the [indiscernible] 2023 backlog. Would you be able to tell us the volume which it correspond to?
Pardon, I could not understand your question.
We have mentioned in the notes that we have reversed the INR 71 crore of the previously booked revenue...
Yes. Yes, INR 71 crores, we have done the reversal.
Yes.
So what would be the quantum of the volume that customer has brought against this? Would you be able to give us in TBTU, PBT terms as well?
Quantum, you can just imagine it's going to be around, we can give you the estimated amount. The exact amount will work out, but estimated amount will be around 11 to 12 PBT will be the volume.
Right. And in terms of the September quarter, is the -- December quarter is the last quarter when buyers can bring in their cargoes for the 2023 backlog. We have indications from any of the...
2021 backlog.
2021 backlog, yes. Do we have indications from customers, what volumes they are planning to bring during the next quarter? Or are there customers who have completed their contracted quota nd have flexibility to do...
I cannot tell you right now, we'll discuss [indiscernible] after the December quarter.
Sure, sir. And in terms of the Kochi volume, are we seeing any uptick in the volume because of basically the start of consumption of the MRPL? Is that sustainable?
See, I have told you that Kochi terminal utilization will enhance after this pipeline is connected to national gas grid. But at present, it is operating almost at the same level, around 22% capacity.
The next question is from the line of S. Ramesh from Nirmal Bang Equities.
So in terms of the balance sheet, if you look at the provisions and receivables and the net provisions. So as of September, you have made provisions worth INR 599 crores, right? So to that extent...
Till date?
Yes. So what is the likelihood of this -- how much of this do you think you will be able to write back, and when would that happen? And secondly, when you look at the renewables net of provisions, when do you think you'll be able to make progress in receiving these outstandings of INR 17 crores, INR 15 crores, which is the net receivable on take-or-pay?
Yes, I have told you that as also mentioned in our disclosure that we have entered into an arrangement with the [indiscernible] have defaulted in 2021 and 2022. For those who have defaulted for the volume of 2021, they can bring volumes till December 2024. And for those who have defaulted in 2022, they can bring their volumes in December 2025. So let this period happen. Thereafter, we will work it out. But one thing I can say that we have taken the bank guarantees from these opticals and it is ensured that the recovery is made, either to make the payment or we sell in cash the bank guarantees.
Okay. So basically, this is just a bookkeeping entry. There is no need to worry about either the receivables not being actually received in cash or these provisions increasing further in terms of a write-off. So that's possibly something in...
This is made as a prudent accounting practice. It's not that it has any impact on the recovery part. There is no need to make a provision also. Because we have got the bank guarantee, there is assurance that payment will come. So this is how we perceive it, perhaps from that point of view, it doesn't look like that -- it will not be recovered.
So just the next couple of questions. One is if you look at the recent statement made by the head of Total in the Singapore Conference, while we agrees that there's a lot of request in capacity, he was cautioning that there could be some delays in some of the new LNG [indiscernible] projects expected in FY '25. So if you have any thoughts on that, do you think that is something which you are concerned about while the '26, '27 numbers look very favorable for importers like India? The next thought is on the recent government decision to allocate additional gas to ONGC Petro additions from the plan to increase production from the nomination blocks. So to what extent would that additional gas been supplied from the nomination back to OPaL will reduce the potential sale of [indiscernible] you are planning to do with OPaL, if you can just address these 2 thoughts, it would be great?
So I think Vivek is there, we will answer your questions, but I would like to point it out that it is not related to our area of work. In fact, whatever decision has been taken by the government of a domestic allocation to OPaL is a government decision and whether they will take ethane from us or not, this is, again, we have to discuss with them, we had a discussion with them, but it has nothing to do with ethane import which we are creating now. The whole discussion will continue, but further my answer will be fortified by Mr. Vivek Mittal.
[Technical Difficulty] There is two questions you asked. One is the Total e-statement that some of the [indiscernible]. You maybe aware that around 200 million capacity, which is being added across U.S., Mozambique and [indiscernible]. So slight delay of few projects will not make much of a difference as well as total availability. So in fact, [indiscernible] of volume from [indiscernible] we are not expecting any delay in cost structure. U.S. projects might get delayed, but [indiscernible] they are on track. [indiscernible]. So as you will be aware, firstly, our contracts with 20 sales only for supply since April 2020 [indiscernible]. So the government can allocate only if they expect from that -- so post 2020, there is no commitment from Petronet side. And of course, we are seeing the [indiscernible] are on this.
No. The reason why I raised that is since you are banking on ONGC Petronet, they are one of the customers who will retain tolling business. So wouldn't that, to some extent, reduce the potential propel to buy [indiscernible] that was broad thought I had.
No, no. So, they are expecting it from [indiscernible] which we are getting from Qatar and in view of that, government is giving domestic gas towards the swap quality. It's not that it is being supplied by ONGC. It is only the extraction, which is taking place from [indiscernible] supplied from [indiscernible] imported by sector. So once that contract ends in April 2020, there is no commitment from [indiscernible] and accordingly, they cannot expect to the question of [indiscernible].
But you are saying that even if there is additional nomination -- gas on a nomination [indiscernible] still expect to do some business in OPaL, is that the correct way to understand that?
Yes, of course. [indiscernible] but still there will be lower commitment to get ONGC from [indiscernible] 2028. So we cannot guarantee supply of which [indiscernible] ONDC, so consequently, the only option left is to import it.
The next question is from the line of Sabri Hazarika from Emkay Global.
Just just a small question regarding the Gorgon volumes at the second phase. So that will be like 1.2 million Kochi tariffs that will start coming from 2026, '27, right?
Right.
And that will be, I think, 0.6 will come in FY '26 and then we ramp up to 1.2 by FY '27?
Right. Correct, correct.
Okay. This has been -- I mean, I think you had adjusted the Kochi tariff, I think, few years back. So this was because of this adjustment only right?
This was done as a part of this settlement that they'll bring to gas, we have renegotiated that Kochi tariffs.
Okay. So in case the demand is not there in Kochi, then it can be bought in this current arrangement in the hedge itself and the charge Kochi tariffs?
Demand will be the, I'm telling you, it will be connected to -- demand will be there, we are always optimistic. We never talk specifics. So if you there -- I have told you, if something will be done, we will not do it. It will be done by [indiscernible] they will have to supply the CGD entities, they can swap the [indiscernible]. So either way this would be utilized. It would be utilized or it has other offtakes because it will be falling in zone-1 tariff for the other [indiscernible].
Right, sir. I mean, there is no further downward adjustment in Kochi tariffs from these volumes, right? Or could there be?
Right now, it is not a demonstrated.
Okay, sir. And just one question. Regarding your CapEx, are you didn't tell out the number, but the cash flow statement is showing around INR 650 crores, INR 660 crores for H1. So that is the broader number, right? .
So.
That is, you can take it. That is okay.
The next question is from the line of Vishnu Kumar from Avendus Spark.
Any questions have been answered, but I just wanted to understand that next year, what is your internal estimate of volumes that we can expect from the new terminal, the new addition, the [indiscernible] gas that we are having?
[indiscernible] 22.5 MMTPA from Dahej and 5 MMTPA on [indiscernible]. So we have the capacity, we can utilize it. But at least, Dahej, we are hopeful that we'll be able to utilize maximum capity because it takes time to utilize, but hopefully, we're trying to utilize maximum possible of the expanded capacity. But it will be around 22.5, you can see more than 20.
So even irrespective of -- I mean, however, we signed the contract spot medium term, whatever we begin, you're still expecting that next year you can do 100% utilization there?
Because the reason being I told you that we have kept capacity of 17.5 million tonnes and we are operating at -- almost last quarter, we have operated around 20 million tonnes. Although we have a contract for 15.75 million tonnes for the gas [indiscernible] and other trading volumes. So you can see that we are able to utilize more than what we have on long-term basis capacity buses. So it's not a challenge because once the prices are moderate, then more volumes are coming in terms of [indiscernible] and short-term energy. There is no [indiscernible]. We hope that we will be able to utilize the entire capacity, which is being expected.
Understood. Sir, in the Kochi, let's say, the pipeline come through and if sit closer to about 4 million, 5 million tonne utilization, other time will our average tariff drop from where we are today? .
Average?
The realization that we're getting in Kochi, if our utilization in Kochi improves post the pipeline, will our tariff at Kochi further go down?
Yes, we cannot discuss this. Right now, Kochi traffic is [indiscernible], there is no reason to revise it, and we are not thinking about that. So whatever be the capacity utilization, it will continue like [indiscernible].
Got it. And one final question from me.
Has not been considered so far. So I cannot ensure what will happen over years [indiscernible]. But as of now, there is no discussion on this issue.
Because a couple of years ago, I remember we were discussing that because utilization was slow, we had...
Yes, we have discussed. You are right, and we had also revised is downward. There are [indiscernible] has gone up to a level of 89.33 [indiscernible].
Okay. The next question is, sir, we have seen some new contracts by Shell getting signed even at 11% on oil. And also, we also understand -- I mean, as you're also highlighting a lot of new liquefaction terminals are coming. So we have signed about 20% with the Qatar. So do you see a scenario that couple of years down the lane where we might get further contract, new contracts getting signed at much lower than what we have signed with Qatar? And how will that impact our current -- as you said, our Qatar contract is getting -- I mean, we are still in talks with our off-takers to sign it. Here, do you see a chance that this is a possibility and how do we mitigate in the contract itself that this kind of problem does not arise for us where we don't -- we're not able to place the volumes?
Price part we cannot discuss, it's a confidential matter. But whosoever is signing the contract at whatever rates be, but we cannot discuss how much we have done and how much others are doing. And other things are that -- whoever signed 11%, I don't know. But whatever we have signed is good contracts, and it's back-to-back. And there is no reason for revision in that contract in for also because it is the fine price, it's a good price. And what others are doing that is not going to impact us. But we can assure you that there is no challenge to PLL as such. It has been already tied up at back to back. So we won't -- don't foresee any reason to revision of prices in energy prices for Qatar.
Okay. And the receivables for short volumes for calendar year '21 fees, understand was about INR 420 crores. Just for bookkeeping, how much was provided out of this INR 420 crores, sir?
You are talking about use or pay charges?
Yes, sir.
It was around INR 420 crores, whatever maybe. But now it has come down slightly because some of the cities have been [indiscernible]. So it has come down to almost INR 393 crores, INR 370 crores rather.
So my question was whether we have already provided this in P&L fully? Or was there something that was spending? I mean, in fourth quarter, trying to understand that whether we'll have a positive or a negative impact on the P&L that's all, if the 70 become 100 or 150?
I think that [indiscernible] will bring the volume in excess of the annual commitment, annual ADP. To that extent, volume, the use or pay charges will be reversed because that part of volume has [indiscernible]. So there is no challenge in that. But only thing we will be able to grow this only after the fourth quarter, which is after December, who was able to bring it and who was not able to bring it. Then we will see what action to be taken and as you know, we have the bank guarantees [indiscernible]. And this is the arrangement they have agreed. So we hope that it will be recovered. For '21, it should be recovered by December 2024.
So my question actually was this INR 420 crores, which you just mentioned, it has already been provided fully in the P&L till date. That was the only question I asked. Any recovery is recovery for that...
It would have been provided by this year-end, but there is no need because by that time almost settlement will happen. It's almost 75% we have provided, you can say.
75% of this is provided?
Yes. 75% we are provided and balance is to be provided. But perhaps it will not be required because by that time, settlements will be done by December.
Thank you very much. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for the closing comments. Thank you, and over to you.
Thank you very much. I, first of all, wish all of you Happy Diwali. And as you know that we have been doing our best to perform in terms of physical performance of Dahej and [indiscernible]. And this endeavor will continue even in future. And as I told you, that company is doing very well and after new upcoming projects being in place, perhaps the bottom line will further increase and the level of company will be very high.
So I thank all of you for reposing confidence and trade in our company. And we want to assure all the investors that we will continue to endeavor to increase the bottom line of the company. And any decision taken will be on a commercial basis. It will not be any outside pressure or any influence. So this is how we are proceeding.Thank you very much.
On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.