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Petronet LNG Ltd
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So greetings, ladies and gentlemen. My name is Harshavardhan Dole. I work at IIFL Securities. And it's my pleasure to host the Petronet LNG management for the third quarter earnings call.I'll briefly introduce the forum. Today, we have Mr. V.K. Mishra, Director, Finance; Mr. Rakesh Chawla, Group General Manager and President, Finance; Mr. Gyanendra Sharma, GM and VP, Marketing; Mr. Vivek Mittal, GM, Marketing; Debabrata Satpathy, DGM, F&A; and Mr. Ashwani, who's also part of the team.Without much of a delay, I would request Director, Finance to make the opening remarks, subsequent to which the floor will be open to Q&A. Over to you, sir.
Yes, very good afternoon to all of you. And first of all, I would be like to convey that this quarter has been very optimistic. And if you look at the throughput at Dahej plant, it has been 222 TBTU. Although it is less than the previous quarter, but still, it is able to match with the corresponding quarter of the previous year. So it has been 222 in the corresponding quarter of previous year. And overall throughput has been 235 this time, this quarter, including Kochi and Dahej. And it has been 233 TBTU in the corresponding quarter of the previous year, although it is less than the previous quarter, which has been almost 254 TBTU.And if you look at the 9 months' throughput, it has been 645 as against 679 in the similar corresponding period of previous year. And overall throughput, if you look at for the 9-month period, it has been almost 677 as against 708 of the previous year. So throughput has been less. But still, profitability if you look at, it has been very high and PBT for the quarter has been INR 1,172 crore as against INR 675 crore in the -- as against INR 902 crore in the corresponding quarter of the previous year. And if you look at the PAT, it has been INR 878 crore as against the PAT of INR 675 crore of the similar corresponding quarter of previous year. And it has been less than the previous quarter, of course. It was -- earlier, PBT was INR 1,243 crore, and this -- PAT was INR 927 crore.But if you look at the performance and compare it with the corresponding quarter of the previous year, we have been able to get a better result. And this better result has been because of the higher regas charges, Ind AS impact, inventory valuation and also trading margins. So these are some of the factors which has contributed to the growth in this particular profit which has been there.And if we compare the 9-month result, we have been able to achieve highest PBT so far for the 9-month period, which is at the level of INR 3,112 crores as compared to INR 2,625 crore in the corresponding period of the previous year. And PAT has been INR 2,323 crore in the 9-month period this year as against INR 2,339 crore in the corresponding period of the previous year.The difference has been because of the tax rate difference, which is almost to the extent of INR 400 crores in the previous year. That's why the PAT is almost similar to that which was there in the corresponding period of the previous year. But PBT has been higher this year. So it matters more.If you look at the result, this has been possible that we have been able to recover from the pandemic this year the losses we have incurred in the first quarter, but after, we are able to reach the pre-COVID level, and this has been possible due to our -- this effective commercial planning and operational efficiency. So that's all from my side. Now I open the house for the questions.And one more important thing which I would like to mention here is that last year there was a resolution for related-party transactions. As you all know that we have most of the contracts signed with our off-takers who are also our promoters, and they are related parties to us and more than 95% of the transactions are in fact through these off-takers and promoters. And if you look at the turnover of last year, it was INR 35,452 crore. Out of that, INR 34,000 crore worth transaction were with only these 4 parties: ONGC, GAIL, IOCL and BPCL.So what I see is that last time, somehow, there was some misunderstanding among the shareholders. And this transaction -- this particular resolution could not get through. So we are proposing it again. It has to be approved in any case if you want to protect the investors' wealth because this is a permission to do the transaction in next financial year from 1st April with the related party. More than 90% -- more than 95% of our bottom line is from these transaction only.So I'll request whosoever is holding portfolio of our shares, they should vote in favor of this related party transaction resolution, which is very shortly being put up to the shareholders for voting. This is very important for transaction for financial year 2021-'22. So that's all from my side. Thank you, and now the house is open for the questions.
[Operator Instructions] So moderator, can you please unmute Pinakin Parekh? Pinakin, go ahead please.
Sir, I have 2 questions. Now seasonally, this tends to be a weak quarter, but it was a very strong set of numbers and management highlighted multiple reasons: inventory, higher utilizations. So can you give us a broad sense of -- if you look at the EBITDA per MMBTU, that has gone up around 5% to 7% Q-on-Q. So in this quarter, sir, what is the inventory gain that is there?And given that LNG prices have been all over the place in January, December and February, what is the outlook for the March quarter in the sense that are we seeing volumes getting impacted? Should we see more inventory gains or losses? Can you give us a sense of this, sir?
There are 2 -- sir, I'll give the numbers. There are 2 numbers, Pinakin, that needs to be noted. One is the inventory valuation gaining INR 60 crores in this quarter. And there is a trading margin of INR 54 crores that was earned because of the spot volume transactions. So these are the one-off things. And rest of the volume outlook, et cetera, will be answered.
Yes. Actually, as we have already -- Debabrata has already clarified that likely gain is there. As you know, the price have been very high in this quarter, at the end of the quarter. And if you look at the kind of prices which has been there, it has almost gone to $32 it has been transacted. So this kind of surge has never been witnessed so far.But of course, this is a one-off occasion because of the [ extreme winter ] being in China, Japan and South Korea because of which, prices have been so high. But otherwise, if you look at now, it's coming down, and almost $7 to $8 it is ranging. And I hope that in time to come, it will be in the range of $5 to $6.And if you look at the long-term prices, it's been stable. So in this quarter if you look at, the long-term pricing there is very, very low as compared to spot prices. So this is very significant because the demand for long-term was higher than the spot.Spot cargoes were very less in this period if you look at third quarter. For next quarter I think the prices will be a little bit subdued. So most likely, it will be in the range of $5 to $6. So many spot transactions will also be conducted in that quarter. And of course, we will see the spot cargoes coming to our terminal also. So we foresee that there will be some increase in the volume in the fourth quarter because of this prices being low as compared to third quarter. So this is our hope that it should be a good number, absolutely no doubt.
Understood. Sir, my second and last question is that while there is now no more talk about the Tellurian deal, there is talk about a new terminal at Gopalpur. Sir, what we have understood is that Qatargas has launched its mega-expansion of LNG and is looking for equity partners who will buy in guaranteed volumes and invest in that project in terms of an equity stake. And Petronet is looking for long-term LNG deals. So is the company open for such an investment in Qatargas, if the proposal were there? Or will the company stay away from equity investments and look only for pure LNG term agreements?
See, it's an -- actually [Audio Gap] investment and second is buying LNG. I want to segregate these 2 things. It should not happen that we should merge the purchase of LNG with investment. If at all investment is so good that that gives us a return which is almost 68% equity return, then of course we will invest. But that will be independent decision from the -- this buying LNG.Right now, LNG is available in plenty and there is no dearth of LNG in the market. So it's not necessary, although we have never -- we have not come across, right now, any proposal from Qatargas. So we cannot comment on this. But in any case, if there is any, then we have to see what is the return on investment, first part; and second, the price of LNG should be good, so that we are able to have the cheapest LNG imported into India.So this is actually something very, you can say, it's a very paradoxically related because once I'm investing, I always ensure that there should be higher return. And once I'm buying, I ensure that I should have the cheapest price. So there is a trade-off to be worked out in such a situation. But we will have to see if there is any proposal. Right now, there is no proposal as such from Qatargas.So it's only LNG, which is -- we are thinking that we should procure LNG. And it should be at a reasonable price, and it should be a flexible contract, if at all. So this is all what I want to say in this regard.
Sure. Next, can you unmute line of S. Ramesh?
Hello?
Yes. Go ahead, Ramesh.
So the first question is, what is the current volumes you're able to pump through the Kochi-Mangalore pipeline? And when do you see the pipeline helping you achieve the increase in the throughput in the Kochi terminal?
Yes, yes, and very rightly you have asked me this question because you must have seen that in November this pipeline was commissioned, Kochi-Mangalore, and since then, there has been volume also through this pipeline.So almost 0.4 MMSCMD is being taken by [ MCF ] and very recently OMPL has also [Audio Gap] and most likely it will be in the range of 0.35 to 2.4 MMSCMD. This is how it is going now, but in future, maybe by this month end or maybe beginning of next month, MRPL will also start taking some volume, but we see the ramp-up of almost additional 1.55 MMSCMD.At present, if you look at today's throughput, it has been very encouraging and very optimistic. It has been 5 MMSCMD, which means almost 1.5 MMTPA of the capacity is being utilized. So we hope that it will be in time to come -- maybe second, third quarter -- this volume will ramp up. And possibly, it should be in the range of 5 MMSCMD, which means we will be utilizing it almost 30% or 28% of the capacity by next year end.So this is how we just assume that it should happen. And because the throughput is increasing day-by-day and 3 customers are already lined up, so we are very optimistic about utilization of our Kochi terminal in time to come, which will be in the range of almost 30% in the next financial year or maybe by third to fourth quarter.
Yes. So the related question is now if you were to be in a position to sell the equivalent of the 5 million tonnes per annum of capacity in Kochi, technically, as on date, can you run the terminal at that full capacity? Do you have the logistics in place to handle the ships? And can this pipeline move all this gas, assuming that we are able to reach a demand of that equivalent 5 million tonnes per annum?
It's actually a hypothetical question. But I would like to clarify you that this volume can be increased because there are 2 aspects how we can just enhance the utilization of Kochi terminal. First one is that city gas distribution projects are coming along the pipeline, almost 10 to 11 cities form along the line of this Kochi-Mangalore. And moreover, another frontline which is expected in the next 1 or 2 years is Kochi-Koottanad-Bangalore pipeline. So that connectivity is very much needed if we want to utilize this entire capacity of 5 MMTPA.So that is already in pipeline, and of course, GAIL is awarding the contract. Some portions have been completed. And up to Kerala side, it has been completed. And the Tamil Nadu section only it is remaining. So we hope that this Coimbatore-Bangalore will be connected very shortly. So then we can hope that these cities will also be connected and industrial lines will be there to consume more and more gas.But as of now, I cannot estimate whether 100% capacity will be utilized after that. But of course, then it will be more than 50%, 60% capacity utilization, which perhaps is good enough. And of course, then in the future, more city gas distribution projects would also come up. Like I have told you, along this Kochi-Mangalore pipeline, there are 9 to 11 cities which are there. Similarly, there'll be more cities along Kochi-Bangalore pipeline. So they will also be connected through this pipeline, then perhaps we can think of more consumption and more utilization of Kochi terminal.
Can you please unmute line of Probal Sen?
Harsh, am I audible now?
Yes, yes.
I have two questions. One, this news event that you had put out about setting up a new subsidiary for LNG bunkering and gas uptake and cooling down. I had two questions on this. One, you have already done reloading cargoes at Kochi even earlier. So does this mean that you already had the GUCD capability? Or is this something new being set up?And with regard to the entire subsidiary, what sort of investment are we looking to put in this new venture? That was my first question.
Yes. Actually, this new company has been formed basically for GUCD operation, gassing-up, cooling down operation, future bunkering services and also other services -- related services like reloading and other things. As of now, we are already doing this particular work of GUCD. But at the same time, if you look at, there has been an SEZ of Kochi where GAIL was a unit, and it has exited from SEZ. Now there is no unit in SEZ. And as a result of that, there is a withdrawal of tax benefits by the SEZ authorities.So what is happening is that almost INR 17 crore to INR 18 crore of tax, which we used to save because of being in SEZ, we are not able to do it now because the SEZ benefits have been withdrawn subsequent to exit of GAIL from the SEZ. So now we have been asked to put up a unit there so that assistance of this SEZ can be done, and because of that, we are having this separate unit at SEZ through this new company, subsidiary company. And perhaps investment is not very high there because this is some service operations only. So this will be a very minimal investment will be there. But of course, some modifications will be carried out in the future. And for the bunkering services also, we need to carry out some modification in jetty. So these are something which I wanted to share with you. And apart from that, you were asking what is the future plan? If you look at the future plan, it's an opportunity for growth also for PLL. Because what we want to do, that we have already conveyed you that we are having a plan of putting up LNG station along highways and Golden Quadrilateral and other places. So we need to have some kind of a company where we can do this kind of business, so perhaps all this business, which is basically retail business, can be undertaken through this new subsidiary. And PLL, as it is, will remain a parent company which is doing the trading of LNG and other things. So we feel that this subsidiary will help us in growth of PLL because we have some other plans also, like CGD projects are coming. In future, we may think of putting up these projects within this new subsidiary only.So this is our thought process. And basically, it's a growth planning for PLL. PLL as such doesn't want to engage in retail business. And perhaps in future, we would like to undertake more business in this new subsidiary, apart from this Kochi SEZ operation which we are undertaking, like GUCD bunkering services and other services.So this is the -- and investment is not much right now as I told you, that is not required. But in the future, whenever it will be required, we'll infuse through a equity participation. And it will be a 100% subsidiary of Petronet LNG Limited.And [Audio Gap] the name has been approved by RoC, and new company will be Petronet Energy Limited.
That's very helpful, sir. If -- I have one more question, if I may. The second question was just confirming what Mr. Ramesh was asking earlier about the Kochi-Bangalore pipeline completion. If I understood you correctly, FY '24, one would expect to have even the Kochi-Bangalore link up and running. So then technically speaking, Kochi should be able to do between 2.5 million to 3 million tonnes or so, give or take?
Around 60%, 70%, it should be utilized then because then it would be connected to National Gas Grid also. And cities along this pipeline will be connected through this pipeline. And perhaps then consumption will increase like anything. So that is an area which is not having any connectivity. So gas consumption is not there. So just to have that pent-up demand we have there and this latent demand is there, but that is not being fed through gas. So we have to think of it and then also the utilization will increase like anything.
Right. Sir, one last question. Sri Lanka project update, if you can give any color, what is happening there?
Sri Lanka project, basically if you look at, that project is still under discussion. And we had a series of meetings with the Chairman of Board of Investment of Sri Lanka, and because the Chairman who was there earlier has been -- has retired and new person has come in there, so he's understanding the things. So we had a meeting in the month of January with the Chairman of Sri Lanka Board, SBOI, and they have asked certain questions, and we have clarified all the questions. So we along with Japanese consortium are going for this, and we want this to be formulated on a G2G basis. And of course, we have requested government also to help us in just materializing this project, so that in a very short period, we can start construction activity for putting up this terminal over there -- actions are due rather, not terminal.Of course, we are very optimistic about this project, hopefully, if this got cleared, because it's now pending on the part of Sri Lanka government, so they have to take a decision. So if it materializes very shortly, then perhaps we'll think of it and...
So can we unmute line of Dhaval Joshi, please? Dhaval, please go ahead. Dhaval? Dhaval just -- go ahead please. Unmute the line from your side as well.
Yes. Hello? Is it audible now?
Yes. Go ahead, please.
Yes, yes. Just one question from my side. So the new fertilizer companies units which comes on Urja Ganga pipeline. So just wanted to know from you, is there any discussion with you guys in terms of sourcing of LNG and for feeding their -- as a raw material for fertilizer? Is there any talks going on right now for incremental volumes?
No, no. There is no discussion as such, but of course, we are already supplying gas through our contract of RasGas and Exxon Mobil. So there is no additional volume which has been requested by GAIL or any other off-takers, IOCL. Right now, there is nothing in discussion. GAIL is there because sometimes even GAIL is having its own portfolio ready that they may feed it through that portfolio, but if it will be asked by GAIL or IOCL, we'll definitely let you know.
Okay. The reason behind I'm asking this question is like the -- last year, I had a discussion with them in terms of the sourcing of gas. So they have talked about sourcing of gas. It's a blend of mix, both domestic as well as LNG. So that's the precise reason I'm asking this question. So is there any talks between you and GAIL on that incremental volumes? Or completely no, nothing as of now?
GAIL and PLL, no.
So can we unmute line of Varatharajan S., please?
Can you hear me, Harsh?
Yes. Varatha, go ahead.
Yes. Sir, I had 2 questions. One, of course, any update on the Kochi tariff? And secondly, OpEx has been low last quarter and this quarter as well, relatively low. So should I assume the -- some of these costs are still being postponed?
I couldn't hear you. Can you repeat your second question?
Yes. Your OpEx has been low last quarter as well as 3Q. So should I assume some of the costs are being postponed even now? Or is there some other reason why the costs are low?
So first question is -- first question also tell me?
Yes, Kochi tariff update, sir?
Kochi tariff update, I'm just giving you. Second question will be answered by Debabrata. So first question is Kochi gas tariff. It has been, as you know, decided by the Board, which has been in the range of INR 79.14 in 2019. So that is being charged, but still the discussion is going on. And perhaps we'll reach a conclusion very shortly, maybe next quarter, you'll come to know about it. And right now, we cannot disclose anything about that. But as you know, we have given them a very reasonable tariff of INR 79. So we hope that it should continue in future also.
Sir, the OpEx trend, sir?
OpEx, Debabrata will reply. Debabrata, please reply the OpEx.
So the OpEx, as rightly said, during this period of pandemic, there were certain expenditures like publicity and repair maintenance. Those are deferred for future. And power cost was lower because of the Dahej volume being lower from the third -- from the second quarter. So these are general deferment and general lower expenses because of the volumes. So this is the explanation for the lower OpEx.
Next, can you unmute line of Anubhav Aggarwal?
Can you hear me?
Yes. Anubhav, go ahead.
Yes. First question is on the utilization. So in month of January, the utilization of Dahej terminal seems to have fallen to roughly about 85%. And first is, would that be a correct assessment? And secondly, how we are doing in February?
Utilization in January, we are not talking, although we are talking about the third quarter. But we have February and March, where we can think of, but I'm not sure how much is that exactly, we have not worked out. It has been low because of certain reasons. We very well know that energy prices have been very high and spot cargoes could not be procured in this period because the prices are so high. Normally off-takers prefer the long-term volumes.So that's the only thing I can just tell you right now, but this particular question could be answered next time, because right now it is premature to disclose anything month-wise. So it's at quarter ending only we discuss with you, but of course, there has been a reason which I told you, that prices of LNG gas is very high. So spot cargoes that used to be procured in this period may not have been procured.
Sir also mentioned, so things have improved in the last few days and prices have come down to reasonable levels. So things are picking up, that's all we'd like to add on.
So it will increase now. Spot cargoes will come now because prices are as much as almost long term gas, so -- and it may be even lower, spot prices. So then it will be using those volume also, spot volumes. So perhaps this will increase in future.
Sure. I have one more question. On the alerts, you mentioned about Dahej expansion further to 22.5 million tonne. Just wanted to check what's the time line for this phase of expansion? And on the current -- the land that we have, what is the maximum Dahej can go up to?
Yes. Actually, if you look at our expansion plan, first phase, we are going to increase it to 20 MMTPA. So maybe by adding 2 more tanks which we are planning to have, for which tendering is already in the process, so we will undertake that work and it will take around almost 36 to 40 months.And perhaps the 3-year period is the period where we can expand up to 20 MMTPA. So then we have -- next phase, we will have 22.5. So maybe another 2, 3 years maybe there. So like that we have planned right now. But 20 MMTPA is our target first, and then we can think of 22.5 MMTPA.
And sir, just one clarity. Beyond 22.5, is there, like, theoretical capacity of Dahej can reach to what number?
Don't have any plan, and we've not pegged it, but perhaps right now this is the maximum capacity I think we should have, because when we increase the capacity, we should have more tanks and other things, so the facilities and construction is required for enhancing the capacity. And this increase up to 22.5 means it's almost as good as almost 4 to 5 terminal.If you compare with the current terminals in India, with 5 MMTPA capacity, we have almost 4 at 1 place. So that will be the magnitude. So it's not a very small thing. What I would say is that it's -- maximum we have planned is 22.5. Right now, we don't have any plan, and we have never checked the technical feasibility also of that magnitude.
So next, can you please unmute line of [ Chinmay Gandre ].
Hello, can you hear me?
Yes.
Yes. Sir, my question is with respect to -- sorry, I joined in a bit late. Sir, my question is with respect to the domestic gas. So around 5 MMSCMD of gas is going to -- is in the market from Reliance and maybe additional 7.5 also they have kind of bid out, so how would that impact in near-term to midterm with respect to our volumes, especially on the Dahej side?
Okay. Actually, let me say that it's an increase in the domestic volume. It's true that it is coming, 5 MMSCMD first they've have already tendered and bids have been invited, and again, 7.5 they've done. So I think this volume is basically, if you look at, this is High Pressure-High Temperature gas, which is being sourced through KG-D6 area and perhaps that will be very high-priced gas also because if you look at the domestic price, it's at present very low, but maybe in the future it will be in the range of $2.5 and $3.But this high-priced gas is still costing $4.06 per MMBTU. But this will be in the range of almost $5 to $6. So that gas, of course, will help us in just supplying domestic gas to the customer. But LNG is also [ sourced ] -- is also not very costly as compared with this High Pressure-High Temperature gas. So I think our volume will continue to be there whatever we are importing, the one is there.And in future, if you look at the city gas distribution projects which are coming up in next 5, 8 years, so we have very optimistic outlook in time to come. Maybe by 2030, you will have consumption of almost double the current consumption. So right now, if you look at we are utilizing only 23 MMTPA of gas as per last year estimate. So it will increase to almost double. So consumption will increase. So entire domestic and imported gas will further increase, to my view, because if you look at the prospective imports in future, it will be double.Right now, we are importing only 23 MMTPA. But in time to come, by 2030, it will be double, almost 46 or 48 MMTPA because consumption pattern is so high. If you look at the government thrust has been that we have to increase the share from 6% to 15%. And if we take that share at 6% to 15%, we need to consume at least 200 MMTPA or 160, 170 MMTPA. That means the outlook is very optimistic. But of course, we're not saying whether we'll reach there or not. But at least, it will be double of the current consumption which is there. So this is how I'm perceiving it.And perhaps this demand, whatever is there, this LNG will continue to grow even at a high rate, domestic gas, whatever it is there, even after consuming that, the demand cannot be matched. So [Audio Gap] demand perspective is very high. People are still buying more and more gas, particularly after this laying of more pipeline and the National Gas Grid being in place in next 4 to 5 years. So that should help us in this consumption of natural gas in India.
So sir, in medium term or short term...
[Audio Gap] to say something on this particular aspect, please.
[ Chinmay ], good afternoon. I'm Gyanendra Sharma. There are a couple of more points to add to it. As you might be aware, PLL is having long-term sale and capacity agreements. So any increment from domestic production is not going to directly affect PLL as such. It maybe having impact on other merchant terminals, without naming them.Nonetheless, I would just say Dahej plant is having the extraordinary strategic advantage of connectivity with almost all the pipeline. And you may be aware, the pipelines are growing up. And there are new loads coming for a demand -- additional -- adding the additional demand. So whatever domestic production comes into, the demand centers are also coming in. So the LNG demand in country, as such, is not going to go down. It's increasing everyday.Last year, it was around 23-plus. Now it is estimated, I mean to say, in '19, 23-plus, and now it has become 26-plus. So you would appreciate the number of pipelines increasing and to match the vision of the government and the need to go consume gas instead of consuming the alternate fuel crude oil base. So it is making sense that LNG will continue growing to cater to the demand. But nonetheless, Dahej will not be at any disadvantage because of this domestic production.
Can we take Vidyadhar Ginde next? Vidya, your line is unmute, go ahead. You'll have to unmute from your side.
I unmuted I think. Can you hear me?
Yes, audible.
Yes. So my question was on the same lines. Given the domestic gas production in the next few weeks, months is likely to go to about 13 MMSCMD from KG-D6 and with another field coming later this year, maybe by end of FY '22, the volumes could -- from KG-D6 could be as high as 20 MMSCMD. So do you think that FY '22 Dahej volumes are likely to be lower than FY '20, and maybe even less than FY '21, basically less than 100% utilization? Is that a possibility?
No, no, there's no possibility. Because these contracts are signed back to back. And these are all take-or-pay types of contracts. So there is no possibility of any...
No, sir, your contract is for 15.75, I'm talking of 17.5 or 18?
Yes, yes, 15.75 at least is assured.
That I agree.
So part of that, whatever volumes will be there, I think spot volumes will still increase, as Mr. Sharma has already indicated. Even this year, 2021, the outlook is that almost 26 -- more than 26 MMTPA will be imported as compared to 23 MMTPA last year. So I hope that this will continue even after this introduction of new gas which you are saying, 35 MMSCMD. So we don't foresee any reduction or any decline in the utilization of our Dahej terminal. We'll continue to utilize that to the fullest.
Just to add, so 15.75, beyond that, as you know, we do exception for in ONGC C2-C3 plant, so that is on top of it. Some of the Gorgon volume is also diverted over here. So to that extent, our capacity is more or less fully booked. And secondly, as we've mentioned previously also, the increase in gas demand is happening in a massive way. Last year, more than 3 million tonnes, despite the COVID impact, the incremental demand has increased as far as LNG is concerned. Secondly, as we mentioned, of this new 7.5, as you would have noted, most of this gas has been consumed by Reliance for its internal refinery. So this will impact some other terminals, but not directly Dahej.
And now that you brought up this Gorgon thing, with Kochi now with this pipeline done, won't a much higher volume of Gorgon go to Kochi now?
Some of it would get diverted. But on top of it, we do buy spot cargoes. Previously also, we have purchased on some other consumers. So that may happen over here also.
Okay. My last question. The volume reduction somewhat in Jan '21, was it mainly on these tolling volumes given that your RasGas should not be affected at all? And so if that is indeed the case, then how does it play out? Is use-or-pay thing? Is it a quarterly thing or an annual thing? In any case, even if it's quarterly or annual, you should be taken care of in March -- in the March quarter?
You are right, absolutely, Vidya. Yes. So it is of course an annual requirement to meet the contractual commitment. So there are flexibilities built within the contract, wherein quarterly it can be lowered and subsequently it can increase. And it was very temporary because it was only on the tolling volumes we saw the impact.
So can we assume that even if the utilization is less, you will get some use-or-pay, and you'll largely be taken care of on that 15.75 kind of thing?
Yes. I would like to intervene here. The demand has not destructed. You must appreciate even the COVID impact, though temporary, there were demand impact, but overall, as we told, 3 million tonne LNG import has increased. Down the line, you would see the April prices has come below $6, and it is in the range of $5 to $6. And it is expected the spot prices will remain low on Indian market to beat whatever temporary reduction in service cargo, this is going to go up manifold, knowing the LNG outflow. And in coming few months, the market is again going to be a glut market.
So Probal Sen, your line is unmute.Okay. There's some issue with his line. Maybe Vivekanand Subbaraman. Can you unmute his line, please?
I hope I'm audible. My 2 questions are, one, on the new opportunities that are emerging in the usage of LNG as a transport fuel. Can you give us an update on the tie-up with OMCs, OEMs to set up fuel stations and possibly with fleet owners for adoption of LNG as a trucking fuel? So that's one. Secondly, thank you for the clarification on the inventory gain and trading gains on spot volumes. Apart from this, was there any other one-off in the results -- reported numbers this quarter?
So first question is regarding this LNG transport sector. So I would like to convey you that we have tied up with Gujarat Gas for setting up 5 LNG stations, which is basically on Delhi-Mumbai Highway. And we are already in the process of buying LNG dispensing station. And perhaps that order will be placed very shortly. So we'll be ordering almost 2 right now and 3 later. So 5 LNG dispensers will be bought and has to be put up along with GSPC, with Gujarat Gas. So this is first one.Secondly, we have also entered MoU with IOCL for setting up 4 LNG stations in Southern India. And apart from that, we have also signed an MoU with IGL for 1 LNG station and with Sabarmati Gas 1 LNG station. Also 1 LNG station we are likely to set up at the request of KSRTC, Kerala State Road Transport Corporation.So this is how we are planning almost 8, 10 stations in collaboration with others. So in future also, we have planned to set up more station as we have planned to have all those key stations on -- this is like that we are planning. So maybe first phase next time, maybe next year, you'll see that more and more LNG stations are coming up.And the LNG consumption in this particular sector, transport sector, is likely to be in the range of almost 7 to 8 MMTPA in time to come. So this is a very untapped, you can say, business area, which has not been seen earlier by anybody. And after reduction of diesel, we can utilize LNG. It should be helping in saving also as well as also helping in environmental issues, which are being addressed through usage of this LNG.So this is how we perceive -- and perhaps another area which is coming up is mining sector also, because lot of equipments are there, which are using huge quantum of diesel. So there is a thought process to use LNG in mining sector also for utilization of various equipments used in mining sector. So this is another area where directly LNG can be used. So we are working on that also.So this is how we are planning to enhance the consumption of LNG in transport sector. And perhaps other companies are also having their own LNG station. So we will have along with OMCs also, and maybe in future, we may go on our own also if required.
Right. Sir, just another follow up on this regard, in this matter. So when you set up the LNG unloading station in Dahej, does the existing 17.5 MMTPA capacity get utilized? Or is it additional infrastructure so the capacity of the regas terminal is not like a bottleneck for this?
Let me tell you, the infrastructure capacity at Dahej is not a reduction. Reason being, we already have 17.5 MMTPA, and this is LNG. So we don't have jetty constraint, we don't have LNG tank constraint, and we have 4 loading bay. So this is absolutely over and above 17.5. Whatever numbers come, that will be over and above that. Is it okay?
Yes. And what about my second question, which was on the -- any other one-offs apart from the inventory and trading gains in the results?
No, there was no other one-off. Basically, the Ind AS impact is there. That was there in the last quarter, we had told you, that INR 77 crores of gain was there. And this quarter also, there is a gain of INR 30 crores. But then quarter-on-quarter, it is a reduction of INR 47 crores. So that is in the other income impact. Apart from that, there is no other one-off.
[Operator Instructions] So next, just unmute line of Amit Rustagi, please.
My question relates to what is the update on the expansion plan? So this 5 million tonne terminal, what are the timelines? And what could be considered as a zero date for this new terminal?
So basically, you are talking about east coast terminal, I think?
Yes, yes, east coast terminal.
Basically, if you look at that point, I can just only say right now that we are at the stage where we are just taking off and looking at the demand perception over there, because this has been a development over there also because if you look at the gas find in KG-D6, it has been there almost 35 MMSCMD by Reliance. So it is the same reason were we are planning to have a terminal over there.So we are working on demand perception and also on the -- this capacity booking contracts. So we need to have at least 30% to 40% booking of the terminal capacity before we undertake this decision of constructing a new terminal. So all those things are being worked out. We're in discussion. And perhaps, this pipeline is also under construction by GAIL, this Jagdishpur-Haldia/Bokaro-Dhamra pipeline. So that terminal will be located near that pipeline only, and there is a pipeline which GAIL is likely to make which is being bid, I think it has been awarded also, Angul-Srikakulam pipeline. So that is very much near to that particular place, if we look at. And perhaps all those things would be looked into, then we will arrive at a decision on that. But right now, we can say that we want to have 1 terminal on the east coast. If at all we start it now, it will take 6 months -- 2, 3 months in just estimating all those things. And thereafter, taking it to the Board and then getting approval, thereafter facing the EPC contractor and the consultants. So this will take some time. So I think we can assume it's a 4-year time from now.
Okay. Sure. And sir, my second question relates to just quickly, can you remind us the inventory gain number in this quarter? I missed that number.
It's INR 60 crores this quarter. Inventory gain is INR 60 crores, Amit.
So next, please unmute line of Sabri Hazarika.
Hello, am I audible?
Yes, Sabri.
Yes. So I just have a few housekeeping questions. One of them is this regasifaction service income for Q3?
Regasification service income, you're saying?
Yes.
So that would be -- just a minute. Yes, it's INR 607 crores, and INR 678 crores in the previous quarter.
INR 678 crores in Q3?
It was in the previous quarter. INR 607 crores is the current quarter.
INR 607 crores is the current quarter. Okay. And secondly, how much was Gorgon volumes in Dahej terminal?
Almost 6 cargoes have come in this year so far -- this quarter.
So TBTU, it would be how much? Around 7?
10.6 TBTU, around 11 TBTU we have processed at Dahej in current quarter.
11 TBTU. Okay, sir. And lastly, on this Ind AS impact, you said around INR 30 crore was the foreign exchange gain. What about the other components in raw material, other expense, interest and depreciation?
Those would remain flat as per the previous quarters. There would be certain changes -- you want to know the entire Ind AS impact?
I mean last quarter the raw material was around INR 101 crore. So against that, how much would be in Q3?
INR 112 crores. The impact is INR 112 crores, I mean, because of the COGS being positive in the EBITDA.
INR 112 crores, right? And in other expenditure, it was around INR 8 crores. So against that, how much it will be?
Yes. It's INR 9 crores in the other expenditure.
And what about depreciation and interest, INR 87 crore and INR 81 crore, you said last quarter?
Yes, it's INR 84 crores and INR 78 crores.
INR 84 crore and INR 78 crore.
Both flat year.
Can we take Nitin Tiwari, please, next?
Am I audible?
Yes, Nitin.
Sir, my question is on the LNG transport again. So just wanted to understand that what would be the evacuation mechanism for LNG that we will be bringing in for transport services? So of course, if my understanding is right, it won't be routed through your tank and regasification, right? It will be -- directly be transported. So what would be the evacuation mechanism? And would jetty capacity be a constraint in terms of how many cargoes can you bring in?
See, it's not -- well, I guess, if you look at -- Ashwani has rightly said that the LNG volume capacity is already available with our tanks and our jetties there -- 2 jetties are there in Dahej. So that's not a constraint. And if you look at the supply of LNG part, we have 4 loading bays available at Dahej and 1 at Kochi, which Kochi we are expanding into almost 3 this loading base. So through that loading base, we can supply LNG through tankers to various places and wherever this LNG stations are being located. So this plan has to be worked out, but we are ready for that.And even now, if you look at the supply of gas to LNG tankers, we are still supplying to industry through these tankers. So I hope that this can be handled very well whenever the stations would be set up, and we'll be able to supply. There is no constraints as such. And our [ regas ] capacity is only 17.5. If we have some more cargoes, we can store it in our tanks. We are building 2 more tanks, so we'll have more flexibility. So I think LNG is not an issue right now. We can supply LNG through our terminal, and that capacity is available to us.
And sir, my second question is around CapEx. So what was our spend for the 9-month plan for the rest of FY '21 and FY '22? And in terms of expansion that we are doing at Dahej, how much have we spent?
The CapEx, as we had given you the forecast of CapEx for FY '21 was INR 348 crores. But because of this COVID impact, I mean there was a lot of, I mean, labor availability issue. And also, we did not have -- I mean, allow labor to come into the plant facilities. So the CapEx is very negligible, it is at INR 65 crores for these 9 months -- for the 9 months.Now the -- as for the approved budget for FY '22, the CapEx forecast is INR 531 crores. Out of that, for the tank, the forecast is INR 125 crores, for the 2 tanks at Dahej. And the major ones are like INR 125 crores for the 2 tanks at Dahej and the CBG distribution network, it will be INR 125 crores. And there are routine CapEx at Dahej terminal and Kochi terminal, which are INR 66 crores and INR 45 crores, respectively. And for the small-scale LNG, it is INR 30 crores. The corporate office building, I mean, the building, whatever is being made, it is INR 70 crores. Yes, these are the major items.
All right. So this is -- the INR 531 crores that you mentioned is for the next year, right FY '22?
Yes, yes.
So can we unmute line of Yogesh Patil?
Hello, am I audible?
Yes.
My first question is related to spot LNG prices. As the spot LNG prices were at a higher level in the third quarter FY '21, your margins are also higher on the sale. So sir, earlier, you mentioned that higher the spot LNG prices lead to the lower marketing margin. Just wanted to understand this.
No, it is not like that. I mean marketing will put more light on this. But the higher margin is because every quarter we do some spot volumes. Now in this quarter, there was a sudden jump from -- I mean, within a period of about 2, 3 weeks' time, there was a jump from about $9 to even $32. So that is why whatever normally spot we were doing, we could be able to get some more margins in this period of time. So it was a one-off opportunity kind of -- that's what we can say. Otherwise, the normal spot trading margins are always there. Now marketing can further...
We don't have anything much to add. As Debabrata explained, it all depends on what opportunity and what point of time we have sold the volume. So to that extent, we make money. And you referred to last quarter. So last quarter, of course, there were some trading margins from some of the volumes we sold out of our holding inventory. Other than that, there is nothing too much to add.
Okay, sir. My second question relates to tariffs on the long-term LNG and the regas volumes. Are they same on both LNG regasification? Or is there any one-off component in the long-term volume?
Long-term volumes have been -- as Deb sir has already explained to you that during this quarter, during current quarter, due to the spot prices going up, probably more spot volumes could not have been taken by our off-takers. So there could be -- the long-term volumes could be a little higher than the quarter-on-quarter comparison.But as such long-term volumes are as per the contract and as per the annual program.
Of course, there is a slight gap between the tariff, between the long-term SGST we have and the long-term capacity agreements, there is a gap of almost INR 2 between the 2. Other than that, there is no gap.
We'll take the last question, please, for the day from Manikantha Garre. Can you unmute his lines?Yes, Manikantha, go ahead. Manikantha, you'll have to unmute line from your side.
Yes. Are you able to hear me now?
Yes.
Yes. I just wanted to ask one question, sir. With respect to the LNG import plans, earlier you have mentioned that 1 million tonne of spot LNG could be imported versus now you are saying 10-year term LNG contracts are being planned. So this spot LNG plan is now -- is put behind?
Spot LNG is not there. We're talking...
No, I mean to say 1 million tonne on spot LNG linkage basis.
Linkage. Okay. Okay. It's a long-term LNG only which we are planning. Still, discussions are going on with the suppliers. And of course, we'll come out with a plan. That is there. It has not been dispensed with and we are still continuing with that.And we are in discussion. The term sheets are being exchanged. Actual agreements are also being discussed. All these things are still going on, but we have not finalized on that 1 MMTPA. So once we finalize it, it could be done. And that -- as you very well know, we have expansion plans for this LNG station. So we have ample opportunity to consume that volume in the new area, CGD and LNG in transport sector.So perhaps that is the particular thought process we are having while having this contract for 1 MMTPA. And the price it will have, it will be very reasonable. If you look at today's market, then we can certainly say that this kind of contract is unique in the market. And we will get the best of both the things; means if it is a formula-driven price, we'll get the lowest price. If it is a spot-related price, it will be spot. Because it is the less of these 2, means the least of these 2 options. So once we have a formula, which is linked to Henry Hub and TTF, fixed cost being constant, or if it is higher, then it is subject to this JKM minus $0.02. So it will never cross that JKM minus $0.02. It will be almost DS [indiscernible] price. So this is a very unique and very revolutionary formula we have done. We are in discussion. We are hopeful we'll work it out. And perhaps by next quarter, we'll be able to give more updates on that.
Sure, sir. Now if I can ask one more question here. The 20 to 22.5 expansion for Dahej terminal, how is that going to be done? Is it via storage tanks again? Or what kind of equipment is required and what could be the CapEx estimate here?
CapEx, as you must have seen, because it's a brownfield project almost, so its CapEx would be in the range of INR 400 crores to INR 450 crores for expansion plan because we have lot of utilities which are already there. So it is not much. But tanks, of course, right now, we have planned to have 2 more tanks. But for that 20 to 22, perhaps tanks we'll have to see whether there is space over there to have further enhancement of the tanks or not. So that is not planned right now. So up to 20 MMTPA, we are thinking right now. And perhaps 2 tanks will be added in the first phase. And thereafter, in second phase, we may take up 20 to 22.5. So right now, we are targeting only 20 MMTPA. So that is our -- that is in our mind. Thereafter, we'll again think of how to expand it further to 22.5.
Ladies and gentlemen, for paucity of time, we'll have to take that as the last question. But I'll take my privileges as a host and squeeze in one question from my side.Sir, can you please elaborate the capital expenditure plan for CBG projects, if at all any?
Yes. Actually, if you look at the CBG project, as you all know that we have signed MoU with the Ministry of Petroleum and Natural Gas for constructing 100 CBG plants across the country. And if you look at our present scenario in our approval terms, we have taken approval from the Board for 5 CBG stations. And we have already identified land in Haryana for 3 CBG stations. We are likely to just sign the agreements and then take the land, either on ownership basis or on a lease, and then start the construction of CBG plants. So that is already there. Apart from that, for evacuation plan of that plant, we are also -- we have written to IGL and other CGD companies to issue NOIs so that we can offload those quantums from these CBG plants. So this is how we are planning. Right now, we have planned immediate to have at least 5 CBG stations in Haryana and in Punjab. And thereafter, we'll unfold more and more stations and also seek NOIs from the CGD entities and more OMCs so that there is a guaranteed offtake from our CBG plants.So this is how we are going ahead. And CapEx plan we have talked about. For 5 station, if you look at, so the CapEx is around INR 35 crore, INR 30 crore. So this is -- see, 1 CBG plant cost. So 5 will rationally cost around, say, INR 150 crores, so corporate CapEx is not much. But there are other factors which have to be looked into like supply of the feeder stock, and then evacuation plan, connectivity to the pipeline and proximity to the pipeline -- nearby pipeline, so that we can supply the gas produced from there.And in these projects, more product will be there, which is basically has to be sold is the organic manure which will be coming out after production of this gas. So this is also to be worked out how we will dispose of that. So that is also a source of income that will be there. But right now, we have plans for 5 immediately. And thereafter we'll plan again, I'll let you know how we are settling those things.
Sure. And absolutely last question. Has the 5% tariff increase happened at Dahej? And when is the 5% tariff increase likely at Kochi?
Tariff increase in Kochi is every 1st April, the same 5% applies.
And Dahej has already happened from January.
So what is the tariff now, sir, if you can just remind us?
Dahej is INR 54.34.
Sure. Very helpful. Sir, on behalf of IIFL, I would like to thank the management for giving us an opportunity to host this interactive session. I would also like to thank all the participants who have logged in and asked interesting questions. In case any of your questions have remained unanswered, please feel free to drop me a line. I will pass it on to the management and have it answered as soon as I can. My e-mail is harsh.dole@iiflcap.com. Thank you very much.
Thank you.
Thank you, everyone.
Thank you, everyone.
Sir, before we disconnect, I thought, let me just take a snap. Yes, please. Thank you.