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Petronet LNG Ltd
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Ladies and gentlemen, good day, and welcome to the Petronet LNG Limited Q4 FY '24 Earnings Conference Call, hosted by PhillipCapital (India) Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Tiwari from Phillip Capital (India) Private Limited. Thank you, and over to you, sir.
Thank you, Steve. Good day, ladies and gentlemen. On behalf of PhillipCapital, I welcome everyone to Petronet LNG's Fourth Quarter FY '24 Earnings Call. From Petronet LNG, we have the pleasure of having with us today, Shri Vinod Kumar Mishra, Director, Finance; Shri Rakesh Chawla, GGM and President F&A; Shri Gyanendra Kumar Sharma, GGM and President, Marketing; Shri Vivek Mittal, CGM and VP Marketing; Shri Debabrata Satpathy, General Manager, F&A; Shri Vikash Maheswari, Deputy General Manager, F&A.
I will now hand over the floor to Petronet LNG's management for their opening remarks, which shall be followed by a Q&A session. Over to you, sir.
Thank you, Nitin, and a very good morning to all of you. So first of all, I will start with the performance of Dahej. And if you look at the physical performance at Dahej, this time -- in this Q4, we have processed 290 TBTU as against 172 TBTU in the corresponding quarter and 218 TBTU in the previous quarter.
And if you look at the overall throughput of the Dahej and Kochi taken together, then it's 234 TBTU, and it was basically 185 TBTU in the corresponding quarter and 232 TBTU in the previous quarter. So there has been highest ever throughput in the Q4, if we compare all Q4 till now. So this is very good that physically, we have been able to perform better than Dahej this time.
And the overall throughput has been at Dahej for the entire year, 865 TBTU as against 704 TBTU in the corresponding year -- previous year. And it has also improved drastically, and it has gone up almost 26% higher. So I think physically, we have performed well this quarter. And if you look at the quarterly results, it has been INR 996 crores of PBT in this Q4 2024, as against INR 818 crores in the corresponding quarter and INR 1,597 crores in the previous quarter.
And if you look at the PAT, it has been INR 738 crores in this Q4 as against INR 614 crores in the corresponding quarter and INR 1,191 crores in the previous quarter. But if you look at the previous quarter, there was Use or Pay charges of an entire year of INR 610 crores so -- it looks, but if you remove that, then it will be around that only, which is the performance right now.
And overall profitability for the year PBT has been INR 4,757 crores as against INR 4,335 crores in the previous year. And similarly, if you look at PAT, it has been INR 3,536 crores as against INR 3,240 crores in the previous financial year. So it has been the highest ever -- highlight is that the highest ever PBT and PAT in the financial year 2023, '24, which is INR 4,757 crores and INR 3,536 crores, respectively.
And another good thing is that there has been growth in volume of 22%. And if you look at the throughput in Q4, it has been highest ever in Q4, 234 TBTU, and growth in volume and throughput in Q4 over a corresponding quarter is 26%. And highest ever TBTU of Q4 -- achieved in Q4 of INR 996 crores.
And growth in PBT and PAT in the current quarter has been to the extent of 22% and 20%, respectively, as compared to the corresponding quarter. And this has been possible because of the lower LNG prices and efficiency and optimization in our operation. And Board of Directors has declared a final dividend of INR 3 per share in the Board meeting held yesterday. That's all from my side, and house is now open for questions.
[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities.
I have a couple of questions. Firstly, in terms of the capacity expansion that is ongoing at Dahej and then the new terminal that we are looking at Gopalpur, can we get a sense of what will be the effective available capacity over FY '25 -- FY '26, if you can give us a sense Dahej in particular?
Yes. In fact, we are already going for the expansion in Dahej and the work is under progress. And by March 2025, we should be able to complete the 5 MMTPA additional capacity in Dahej. So our capacity of -- existing capacity of 17.5 MMTPA will increase to 22.5 MMTPA by March '25.
So you can say, literally, it will be -- '25, '26, it should be available for our usage. And the next year, you can say, effectively, it will be used. So this is about the Dahej. And as far as the other terminal you are talking about, Gopalpur, that terminal will take around 3 years because right now, it's in the initial stage.
And we are, in fact, doing all those due diligence and other things. We have signed the agreement with Gopalpur Ports Limited, but only thing, there will be construction of jetty and other infrastructure over there.
So initially, it is planned to have FSRU terminal, but it may be -- because FSRU availability is an issue in the international market so it may be possible that we may go for a land-based terminal in Gopalpur also. Existing capacity of Gopalpur was capped at 4 MMTPA in case it is FSRU terminal. But if it goes -- if we go for this land-based terminal, then it will be around 5 MMTPA capacity.
But it will take around 3 years' time. So it will not be available in the year 2025, '26, that's very obvious. And of course, after 2 years, we can say that it should be available.
So just to follow up a little bit. In terms of the 22.5 million tonnes, so basically, today, we are effectively at 17.5 million tonnes. Have we signed all the offsite arrangements, given how near now the completion is of this additional capacity? Are all the offsite arrangements in place? Or are we looking to still probably leverage the spot market for this additional volume, at least in the initial period?
We are trying to make effort that we should have some capacity build-out of 5 MMTPA. And if the entire capacity build, that's good. We are following up with the customers. And if it will be possible, we will let you know. But right now, nothing can be disclosed because nothing has been materialized.
But in future, it is possible that some capacity may be built. But if you see the market, it's very optimistic. And we hope that this capacity can be utilized in the market, seeing the growth of volume and gas uses after this prices coming down. And now if you look at the data of PPAC over the last year, there has been a total consumption of around 1.88 MMSCMD.
And almost 48% of that was basically LNG. So this share will further increase in future. Because right now, if you look at the prices of -- price of LNG, it is almost equivalent to the HPHT gas available in the market.
So we -- or maybe some $1 or $2 maybe has. It's not very -- not much difference is there in spot LNG price and domestic gas market price. So I think there is an ample scope for uses of terminal in future because the growth of gas consumption will drive further usage of our Dahej terminal. And if capacity is good, then we will let you know.
Got it. Sir, lastly, just a couple of housekeeping questions. Can we get the number, as we do every quarter of the regas service revenue and the Ind AS impact on the numbers, on depreciation, interest and other income?
Debabrata will respond to you.
The regas revenue was INR 674 crores. And what was your next question?
Sir, the Ind AS impact that you typically get?
The Ind As impact is on the positive side. There is...
You're not very audible, I'm sorry, if you can get closer to the mic, sir.
Gross margin positive, INR 150 crores, gross margin level. And ForEx loss, INR 3 crores. And at other expenses level, positive is INR 8 crores and depreciation INR 82 crores, and finance cost is INR 68 crores.
INR 58 crores or INR 68 crores, sir?
INR 68 crores.
[Operator Instructions] The next question is from the line of Vikash Jain from CLSA.
This is mainly linked to this provisioning that we are doing and for the benefit of all of us, if we can clarify how this is currently working? Firstly, if you can correct my numbers, if I'm wrong, there's about INR 307 crores -- INR 378 crores -- INR 379 crores of user pay that you have booked in '21, about INR 844 crores in '22 and about INR 610 crores in '23. Now how exactly on a quarter-by-quarter basis would provisioning really work for this in terms of the provision that you're making? .
Yes. So if you look at -- this number is correct, first of all, I will confirm, Vikash. And next question is the provisioning you are asking. So we have made provision of almost 20% after end of 1 year in case of use or pay charges.
So for '21, whatever was due, provisioning was made to the extent of 20% last year. This was to the extent of INR 90 crores almost. Because at that time, it was higher figures. So we have made a provision of 20%. Around this, INR 90 crores, it has been made.
This year, we are making INR 260 crores -- INR 264 crores of provision. The total provision will work out to INR 354 crores till date. So basically, '22 also is there, INR 844 crores. So 20% of that also has been provided. So INR 100 crores provision of last year's, '21 use or pay charge, and INR 169 crores of 2022 use or pay charge. This becomes almost INR 259 crores, and there is some reversal for INR 5 crores, then it comes to INR 264 crores. And last year's provision was INR 90 cores. The total becomes INR 354 crores.
Okay. I'm -- and sir, going ahead, Mishra ji, if we look at it, so first year is -- from my understanding, first year is 20%. Second year is 30% and last year is 50%. So in that case, for 2022, every quarter, we will be making now a provision of 12.5% -- sorry, 2021, 12.5% and 7.5% for 2022 for the next 3 quarters. And in the fourth quarter, there will be the 20% provision for 2023. Is that roughly how it will work? .
Yes, you are correct because what we have done now this year that for the current year, for 9 months period, we had made provision in December quarter of INR 227 crores. And balance INR 37 crores provision we have made in this last quarter, Q4.
So you are correct what you are saying that this is how it has been done, worked out, that this is the year where we have to provide 30%. So 7.5% per quarter is fine -- number is fine that. And for the current year, which we have made out of this current -- 2022, it has been almost 5%. So you can say that for the calendar year '22, per quarter is 5%. And for '21, it is 7.5%.
Okay. Sorry, sir, for '22 calendar year, now from 1Q '25, we will be making 7.5%. But for '21, 12.5% will be made every quarter, right, because this is the last year, so all of 50%...
Absolutely correct.
So if I look at that, roughly what I get on to is about INR 111 crore kind of a provision every quarter from here from 1Q, 2Q, 3Q. And in 4Q because you get an extra 20% of the 2023 provision, that's another INR 122 crores.
So 4Q will be about INR 230 crores. So all in all, about INR 560 crores of provision will be made divided like that over the year roughly, is that roughly -- doesn't -- I mean, in the ballpark?
No, no, I'm just correcting you right now. First of all, 2021 provision, which we have made this 24th December is the last year. Up to December, if people are -- customers are not able to bring the cargoes, additional to the extent they have defaulted in '21, then we will either get the payment from that or we will encash the bank guarantee, which we have already taken. So to the extent of INR 379 crores, we have bank guarantee with us, and they are supposed to bring additional cargo. Otherwise, we shall encash it. First thing is clear. Second...
Just one thing over here, of this INR 379 crores, 50% of provisioning is spending, right? So that will be done over the next 3 months?
It will be done, but last quarter will be there where settlement has to...
Correct, where settlement happens, where it can happen through balance sheet or through provision?
You can say 2 quarters, we have to make a provision. First quarter is -- so it will be -- third quarter will be the settlement quarter. The 2 quarters, of course, we may have to make. In third quarter, there is no need to make a provision if we encash the bank guarantee. Because by 31st December, it will be known whether they are bringing or not. .
Sure, sure. If they bring the cargo, then it will be normal. Correct. If they bring all of the cargo, then it will be normal provision.
And provision, as you know, that whatever provision we have made, it will be reversed because then we will have the revenues impact in the...
Yes. I mean you will have matching revenue at a little bit higher revenue, so there will be revenue...
Because of the escalation of 5%.
And since we are on it, the corresponding numbers for this provision work out to be almost like, for example, 69 TBTU is what is the possible shortfall for 2021. So may I ask how much of this has already been used from this -- for adjustment in this quarter and the last quarter?
We cannot discuss all these issues. But at the end of this year -- this particular calendar year, we will definitely inform you what is the final result. It is too early to say anything on this issue, not appropriate.
Okay. But overall 3 years, there is about 6.6 million tonnes of cargoes, which has to be adjusted for the 3 years that -- is that number roughly all right broadly? .
We have not worked out, but I will definitely work out. Just a minute. I'm just giving the answer because we have worked out in terms of value. 3.5 million tonnes almost. And this is...
And that we have included '23 calendar.
So '23 is not [indiscernible] because '23, we have not made any scheme or we have not arrived any arrangement. So it will be less because INR 610 crores is for the current -- last year, '23.
There is no scheme from bringing the cargo for INR 610 crores. It means that, that has to be recovered without any expansion of the period for bringing cargoes. So it's only for '21 and '22 calendar years that we have made a scheme and arrived in arrangement. It's a onetime arrangement.
Okay. So for '23, they have not been given extra 2 years or anything?
No, no, it's not...
Have you got bank guarantees for '23?
No bank guarantees. We are asking them to make the payment itself...
Okay understand. Right now that is not something which is under discussion, but yes, understood. And the CapEx for our land-based terminal, has that gone up? .
Sorry, to interrupt...
Okay, sorry. Last one, just this one, just a number. Has the CapEx for the land-based terminal gone up and...
We have not estimated the number. But normally, a greenfield LNG terminal of 5 MMTPA costs around INR 5,500 crores. So we have not seen that number because that decision is yet to be taken. So we will work it out, then we'll let you know. But normally, in case of greenfield LNG terminal of 5 MMTPA capacity is INR 5,500 crores around.
[Operator Instructions] The next question is from the line of Varatharajan from Antique Stockbroking Limited. .
I have 2 questions. On the petrochem side, have you placed any orders long -- for long lead items and any kind of progress you can update us on? .
Long lead items right now, we are not aware because the consultant is there so they are making all the arrangements, but it is in the process. I cannot say that it has been ordered. .
Okay. And so no financial commitment as it from our side around the project so far?
No, there is a financial commitment because we have already appointed licensor. And he is working on it because he has to give the packages and EPCM and EPC packages we are giving because thereafter, we will work on this. But we have appointed the licensor for both the propane and PP -- PDH and PP. So they are on the job. So we have to finalize it and then go ahead with the project. .
Sure. On the offtake arrangement, what is the time option for us to tie in the offtake arrangement for the renewed cash? I mean, it supposed to be in the next 1 year or like we will still wait until '26 to do that?
Which -- you are talking offtake arrangement for?
Offtake agreement for the existing volumes because they are expiring again like along with the Qatar contract. So offtake -- again, this take or pay commitments, you will be entering into an arrangement with all the offtake agreement?
Yes, it will be there. It will be there. For the contract, we have entered with Qatar Energy after '28.
Yes. So this arrangement will be offtake arrangement? Like again you have to negotiate the terms or is it an automatic renewal kind of arrangement?
It will be there -- we are working out, but we cannot discuss all those issues. And it will be done, we'll let you know because this is being discussed in detail and it's in the process. And very soon, we shall be entering into GSPA, gas sale and purchase agreement with the offtake agreement. .
There's nothing like timeframe...
They have committed it. .
Sure. Any kind of a timeframe for this, sir?
Timeframe, I cannot tell you, but I've told you this will be done as early as possible.
The next question is from the line of Sabri Hazarika from Emkay Global.
So I have 2 questions. Firstly, with respect to the current utilization of the Dahej terminal and Kochi terminal? And what is the volume expectation for FY '25 in particular? And the fact that in -- yesterday in 1 media report, I think, the MD has stated that this year, the LNG demand could be like to 27 million tonnes versus, say, 22 million tonnes last year. So any comment on that? .
Yes, the utilization level, I will just again tell you that it is 97% this quarter Q4...
Currently, what would be the utilization? .
Currently, it is around this figure only. So it is even -- it may be more than that. It is more than that, but we cannot discuss that number. But it is there, not less than this, this much I can say. And Kochi, it has been 22%. It is also almost in the same range as of now, but exact number, we need to know.
But FY '25, any guidance you would want to give?
Guidance, what our MD sir has already declared that it will be -- there's a likely import of 27 million tonnes in the next year, '25, '26 -- '24, '25. So it is likely because now prices have come down. And as you know that Indian market is basically price-sensitive market.
So as and when the prices are lower, we will tend to consume more energy. And moreover, this season is also very hot and now the power demand has substantially increased. And given the circular has come of MoP and Power Ministry that more and more power has to produce from gas. So now it is running high and much more gas is being used than otherwise that is used in India. So these are the factors which are driving growth of LNG volumes in the current year so...
You expect a 20% sort of like LNG demand growth in FY '25, Y-o-Y?
Yes, yes, we expect it because if you look at last month's number, which has now been published by PPAC, it has been almost 200 MMSCMD total. And out of that, more than 50% is the LNG. .
Okay. April, you are talking about, right? .
Yes, April, I'm talking...
Okay. And just one second question on relating to your balance sheet. So this other financial assets in the long term that seems to have gone up significantly, so is there any adjustment with respect to like short-term investments or something of that sort because it used to be like 270...
Other -- what is the number you've just -- other financial...
From INR 95 crores, it went to like almost like INR 1,700 crores kind of a run rate.
This is nothing. These all FDs actually because we go mutual fund FD, whatever is our investment policy is decided and accordingly we're making investments. So whichever is giving the higher return, it's FD, which is basically more than 12 months.
Okay. So that's why it's classified as long-term assets, but basically, the cash...
Because this is for more 12 months. You are getting a higher rate of interest if we do it for 12 months. .
The next question is from the line of Amit Murarka from Axis Capital.
Just on CapEx, could you just spell out the planned spend for FY '25 and FY '26? .
Yes. I can just tell you that, as you know, that we have an aggressive CapEx plan in '25, '26 -- '24, '25 and -- although we have done less CapEx last time. But this time, we expect that more capacity will be there.
But some of the CapEx item, I can tell you that, that may happen in this year. One of them is -- as you know, the tank is almost complete. It will be commissioned maybe in next month. The 2 tanks which we've constructed at a CapEx of almost INR 1,246 crores have been commissioned. So there will not be much CapEx this year because it has been commissioned.
And other items, which are going on, are Dahej expansion of INR 570 crores of 5 MMTPA. So that is going on. Next year, by March, it will be completed. So some CapEx may be there from that also. And other CapEx item are there. We have a very aggressive plan.
But the only thing is [ detailing ]. So we have aggressive CapEx plan, but let us see how much we are able to do, if we can. But we have jetty of INR 1,700 crores plan, but it will not be entirely spent in 1 year. If we take 3 years, we can divide it by 3. And another project, Gopalpur, which is coming up with INR 2,300 crores, but as you know that it will also take 2, 3 years.
So we can be get it into 3 so -- petchem project is there, which may have a higher CapEx this year. So We plan to have aggressive CapEx. But right now, I cannot tell you exactly how much it will happen, but we have planned heavy CapEx.
When will the outlay on petchem actually start? Will it start in this quarter again or maybe second half of the year?
Pardon me, can you repeat...
Actual spends on the petchem project, when will it start -- when you will start spending money on that project?
It may start this year -- this current year, but it may not be too high, but it will be started because we have already appointed licensor. So some payment maybe -- may have to be released to licensor also. So -- and other items may come up when they are awarded.
But otherwise, unless and until jobs are awarded or the material has been ordered, there will not be CapEx because right now, it is -- still we are in the stage where we are making all EPC packages and EPCM packages so -- for the execution of the project.
So -- all these things are to be seen, but as of now, what will be the total expenditure, this is very difficult to tell. But maybe after 2, 3 quarters, we will be able to tell you, second quarter after, that what is the way forward for the CapEx.
Sure. Who is your licensor has been selected for the project? .
This is all not something -- it's a international licensor. Very few licensors are there. One of them has been selected, but the 2 licensors have been selected. So these are all U.S. based, U.K. -- Europe-based licensors. But name, I can tell you 2, 3 are there.
One is UOP is there. One of them is Lummus. So these are the licensors so out of 2, 3 technologies only are available for PP and PDH. So these are the licensors who are available across the globe. So out of these, we have appointed, and they are working on it.
Also, I just wanted to confirm that the 5% annual escalation on Kochi, has it been taken from 1st April?
Yes, yes, it has been taken.
Okay. Okay. And I remember in the last couple of quarters, you had mentioned that the lease accounting impact will start reversing from FY '25?
Yes, it has already started. We have already told the lease accounting impact of the quarter, one with that as you will see that this time around, it is a nil impact. Even after a small [ ForEx ] loss. Okay.
The next question is from the line of Yogesh Patil from Dolat Capital.
Sir, my question is related to competition from new LNG terminals like Chhara and the whole breakwater completion. So in the recent HPCL con call, the management has negated that the Chhara terminal will be operational in the second half FY '25. And they will also have the same regas tariff largely in line with the day. So do you expect any kind of competition from this new terminal?
No, I don't expect any competition because we cannot match the geographies of these 2 terminals. It is not possible for any customer to ship their user base from Dahej to Chhara or any other. So there are a lot of issues in gas light because connectivity is one of the major issues which has to be addressed. And our Dahej terminal is very well connected. Almost 5 pipelines are there, which are connected to the Dahej terminal.
So evacuation capacity is so high that nobody can match it. And moreover, nowadays, different concept has arrived at unified tariffs has been notified by PNGRB. So if any demand center is close to the source of the gas, then it will be charged very less tariffs. And if it is within 300 kilometers, it's only up to INR 40 per MMBtu. 300 to 1,200 kilometers is INR 79. And if more than 1,200 is almost INR [ 140 ]
So looking at that thing also, I think whichever terminal is located via the demand center, that will be, I think, used for the suppliers there. And moreover, there is no competition. We are a leader in this market, and we will remain because nobody can match our capabilities in evacuation of the gas because of the connectivity of the 4, 5 pipelines. And though we are not saying they will not be used, they will also used. They will use their terminal.
But we cannot match it. And it's not like that some volume, which is coming today and it will go to Chhara now under license. There's nothing like that. From addition volume may come up for them, it will grow there, but our capacities are booked, our customers are there. So if you look at our consumption level, it has been 97% Dahej usage is there last year.
So it is continuing. So I think there is no challenge from that. But additional because consumption is increasing day by day. As we have said that the whole kitty is increasing. So they will also have some share in the additional kitty, which will be added to the LNG import. So I think that is the only thing. Otherwise, we have a capacity in force, and we have a high utilization level, that will remain.
And Dabhol, as you have said, they are -- I think they have not contracted this breakwater, but they will be nearing the completion. So right now, because of monsoon, I think it has already been closed. So maybe after October, it will be started. And as you are saying breakwater, breakwater is not enough because even if they construct breakwater. They cannot utilize the Dabhol terminal fully. There will be some air heaters and other changes in the plant, then only they can use it to the highest capacity.
Okay. And second question, I believe the quarter of Q4, the inventory losses of close to INR 107 crores. So can you throw some light on this, how much was the volume on which you have booked the losses, some details about that?
We -- normally, this kind of thing; we don't have. We have told you that there is a loss. I think this should be good enough you can -- we be satisfied with the number. Because detailing is, again, we have to -- we cannot discuss all those things in the market, how much is inventory and how much large is that. But total, this is the largest we have booked.
Okay. And was it on spot volume --spot LNG volumes?
Inventory. non-submitted inventories there. So that is that.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
We have discussed about sort of a 5 MMTPA demand increase during FY '25. But without the Dahej terminal already operating at 97% utilization and little demand in the South, which is already again sort of reached 22% level, how much of this we can practically capture during FY '25?
As I said, expansion will be coming up only in the March '25. So maybe it will be available for next 2 years, '25, '26.
Anything is as you know, historically, we have been able to operate our plant at more than 100% capacity. So we do expect that the majority of this incremental volume will land in the hedge. Inherently, if you take 110%, then we have another 2 million tonne of capacity available.
And last year also, there was some fair capacity available from the total license majority of 4 million, 5 million tonne land in Dahej.
So it will be increasing on mean volume will increase substantially once capital is available. But as I told you, '24, '25 financial years, it will not be available too much. It will come only in the month of March. So practically, it will not be available for financial year '24, '25. But we have capacity 17.5 million tonnes. This can be utilized to the extent of 10% of the capacity. So we can actually utilize our 17.5 to almost 19.5 million tonnes, even more than that.
Understood. In terms of -- usually, we used to see the shift of some of the volumes when Dabhol goes down during the monsoon months. So is that also possibility exist?
Yes, yes, that exists now. And right now, power demand has substantially gone up. So now more cargoes whatever it is coming, mostly will come to Dahej -- as you know that Dabhol will not be able to take the additional cargoes now. So that is true and it will in be.And volume certainly will be higher in this April to June quarter and July to September quarter.
But again, limitation is basically the capacity 1 million to 2 million capacity...
You have rightly question now. I'll be -- it will be difficult to -- how we will accommodate the cargoes. That's why the 5 MMTPA expansion is very much required. Because this is a game of opportunity when there is an opportunity, we should utilize the entire capacity. But right now, we don't have -- had we had that 5 million tonne and now, we would have been ready for additional volumes to any extent. But right now, whatever is available within the framework of 17.5% MMTPA. So plus 10% can be added, that much on we can process.
Sure. And you were also referring to the unified tariff and our advantage. Just a follow-up question on the Dahej, basically. So we were referring to the, basically, the unified tariff and advantage for the customers within Zone 1, where transportation tariff would be lower. Would you be able to indicate how much percentage of the existing volume lends to the consumers within Zone 1?
I am just telling you that this is the philosophy going on. That whichever terminal is we are to the demand center, that will be utilized because there will be lower tariffs. So what I am saying that if any terminal is located at Dhamra, being from North India will take gas from Dhamra. Because that tariffs will be of Zone 3. I am saying whichever tunnel is a nearest one, it will be utilized. So this was just as a principle, as I was saying that this is normally practice which will be followed because of the unified tariffs.
But is it possible to break down our volumes into Zone 1, Zone 2, Zone 3 just to get some sense?
Actually, we are not transporting gas. It is GAIL. Better you ask this question from GAIL how much volume is being given in Zone 1 and how much in Zone 2 and Zone 3. So we cannot exactly tell these numbers because we are selling gas external to these customers, GAIL, IOCL, BPCL. So they will be able to tell you better than we.
The next question is from the line of Somaiah V from Avendus Spark.
So first question is this 550 capacity that's coming in March '25. What will be the ramp-up that we expect for short I mean FY '26, how much of this is something that we can look like, that's one. Second Kochi-Bangalore Pipeline, what is the timeline at this point we are looking at? Until then, where do we see utilization that we can expect to see them?
Yes. So first question is the capacity availability in March '25, how it could be utilized, how much, but I cannot ramp up will be there, of course, 2, 3 months a stabilization time is always there. But after that, we can utilize this capacity.
But again, this all will depend upon the capacity booking, if at all, that is done till that time. And also, the more volume which is coming because we have hope that more volume will come as we have already mentioned that our 27 million tonne volume will be coming next year -- this year. So I think Kitty will be to our terminal also. So if that volume continues and with a growth of 10%, 15%, that's certainly our 5 MMTPA will be utilized to a great extent.
And however, I just tell you that utilization of the terminal -- other terminal is very miniscule. Some terminals are operating at 35%, 20%, 30%. So ours is a terminal, which is utilized maximum. So whatever will be the capacity, utilization level of our terminal will be higher. And once the capacities are also booked, then it will further add to our volume consistently over a period of time.
But right now, it is very difficult to just give a forecast that how much will be the volume for full filling that. But it will be available than only to access because unless infrastructure is laid, we cannot expect to utilize it. So we have to keep it ready, and then we have to see that volumes are coming there or not. Also same as the, if possible, to book the capacity, whatever it can possible.
The other question around Kochi Bangalore.
Well, Kochi-Bangalore pipeline is, of course, as you know, that this Kochi-Bangalore pipeline only 250 on stretch was remaining. And it is from Coimbatore to Krishnagiri or 250 kilometers. So that part is also under construction.
And as it is understood that this was to be completed by this year-end. And it has also come under this PRAGATI of PMO. So it is being monitored at PMO also that how is the progress of this pipeline. So we hope that it should be completed by this year. If not possible, then maybe next year by March '25, it should come. So this is the expectation. But work is going on, and let us see what happens at that point of time.
And utilization, of course, if that is corrected, will be very high because as you know, that than Kochi will be connected to the National Gas Grid. Once the tender is connected to National Gas Grid, then we can swab the gas and use it anywhere. So in the gas case, we can use, we say, some city gas distribution companies are coming in that area. And domestic gas availability in Southern India and near Kochi is very poor or negligible. So naturally, through swapping arrangement, gas can be supplied to those CGD customers there and once it is connected to National Gas Grid. And that will ramp up the utilization level of our Kochi terminal.
And moreover, there's a good news that more and more gas is being used through tankers. And this is something which is really encouraging because if you look at the loading of the customers to tankers to this terminal of Kochi, last year, we have loaded around 2,230 tankers. And one tanker have around 17 Mt of gas.
So there's a scope for uses of wear through tankers also because our pipeline is not everywhere. So in Southern India, we are having a possibility that many of the cases, gas will be supplied through tankers. So last year, it was only 1,500 tankers we have loaded. This year, it is 2,200. So almost 50% hike is there in the loading of LNG tankers in that area. So this is 1 mode of enhancing the consumption. And we hope that after city gas distribution companies will be a network there, they will utilize it because it can be flat with domestic gas also. And this sorting arrangement can be made and then it can be supplied to these CGD entities.
Sir, 1 question on the cash balance. So this continues to [ brim ]. So including the investment that we are operators almost close to INR 9,000 crores. So we think this kind of -- I mean, actually, we are adding a good amount of free cash flow. So do we think we need this kind of a cash position to fund the CapEx program? Or we think about higher payout option?
We are actually expecting that there will be CapEx, and that's why we have been keeping it. And whatever the cash balance, we are seeing INR 9,000 crores is on the higher side because it is on last date of the quarter, March 31. But in fact, there has been a liability of INR 2,600 crores. So we have to pay that. So around average cash is around INR 7,000 crores. It's not INR 9,000 crores average because that is the amount we have to pay to the suppliers.
So that's why it is only on that day, it has shown that it is higher. But normally, average cash is INR 7,000 crores. But as far as the project is concerned, we have a petrochemical project for which we have to fund a 70-30 ratio of equity is 30%. So almost INR 6,000 crores, maybe that we may have to send through cash. And balance, you will be getting it from the debts on the [ lands ]. And perhaps that is the ratio we have to maintain. And we are keeping the cash with us for the CapEx plan only.
The next question is from the line of Ramesh from Nirmal Bang Equities.
Just a clarification on the user pay receivables and the provision you are making. So whatever you made so far, you adjusted for the INR 610 crores out of your receivable. It's about 25%, right? that's around INR 1,200 crores of receivables. So on the balance, which you have not provided for, do we assume that you have high confidence of either adjusting into the bank guarantee or will be made up by the customers give you external volumes in future. Is that a fair understanding?
Yes, yes, yes. But the only thing -- yes, you complete your question, then I will tell you.
Yes. So that's on the user fee provision. Second thing is if you're looking at the question on competition. You are planning this Gopalpur terminal and Dhamra terminal is already up and running, and they have some capacity for payment. So in terms of your own assessment once Dhamra fully booked, how do you see the time to ramp up your Gopalpur terminal or the end base. What is your sense in terms of the future demand outlook? And what the kind of confidence you have in terms of going ahead with that part, given that Dhamra is fairly close by?
No, it's all right. But only the first question is regarding new user pay charges, you are asking? So.
Yes.
So I will tell you that total user pay charges, we have put for the calendar year 2021 was INR 379 crores. And for the calendar year 2022, it was INR 844 crores. And these 2 years together make it to INR 1,222 crores, out of which we have already made a provision of INR 354 crores.
So this is a total provision till date we have made out of it. And the INR 610 crores, which have been, in fact, booked as user pay charges in current financial year of 2023, '24. There is no as such arrangement for that, that we have to book some 20%, 50% of provision. But after 1 year, if they do, then we will have to make the provision. But we are not making any arrangement right now. We are expecting that this particular amount should be paid by the customers. And possibly, there will not be a requirement of any extension of the time period for utilization for bringing more cargoes like we have done for '21/'22 because that was a standalone arrangement for these 2 years only. And that too, due to this COVID period, it has been '21, and '22 has been the Russia-Ukraine war, which has impacted the incoming cargoes being the prices were abnormally high. So that was the reason we have considered growth. But '23, we have not done anything so far. So we expect that INR 610 crores will be recovered. So this is regarding...
On the -- I understand the numbers. So you have made some provision on the INR 1,200 crores. So the balance is still open as receivable. So I'm just trying to understand if, what is the kind of confidence you have in terms of recovering that balance, which is not provided for over INR 900 crores?
It will be recovered because we have received the bank guarantee for this INR 379 crores and INR 844 crores. And they have even given time till December '24, to bring additional volumes equivalent is the volume they have departed in 2021 calendar year.
If they don't bring by December '24 for the volume defaulted in 2021 calendar year, then we -- either they will make the payment for that user pay charges of INR 379 crores or we shall encash the bank guarantee. The first thing is clear, second is 2022 calendar year of user pay charges of INR 844 crores. For that also, we have received the bank guarantees.
If they bring volume till December 2025, it's fine. If they don't break, they will have to pay the payment, make the payment, and we otherwise, we shall encash the bank guarantee.
So our user pay charges for calendar year '21 and '22 are INR 1,222 crores is secured against the bank. So there is a surety of the payment being received Okay. And for this year, which has been booked in 2023 calendar year, INR 610 crores. There is no arrangement. We still are pursuing the customers that they should make the payment.
So entire INR 1,222 crores is secured. This is what I want to convey to you, that there is no risk as such that we will have to make a provision and then it will not be paid because we have bank guarantee. Still, we are making provisions as a means accounting prudence.
Sir, a question on the Gopalpur terminal competition from Dhamra...
Second question is regarding the Gopalpur terminal. So this is -- I would like to tell you that the consumption of gas is increasing in the country. And if you know that this eastern part of India, it was not having any pipeline connectivity.
But now out of this pipeline,Jagdishpur-Haldia-Bokaro-Dhamra coming up. Our terminal, Gopalpur terminal, is located hardly 40 kilometers away from this pipeline. So there is a possibility that we will be able to utilize, and we will try to get the capacities booked in Gopalpur terminal as we have done in Dahej. So that also, we are making effort with the customers.
And as you are saying that what is the CapEx. So once we lay the infrastructure, we see, make a due diligence what other industry and mining industries there and a lot of dumper tippers and cranes are used in such mine. So there's a possibility of LNG being used as transport fuel in that particular reason.
And also other industries are there, which is coming up. So it will be utilized. And more -- one more thing is there that if you look at, say, a customer is located in Dhamra region, [ Dabhol ] region, then it will largely today to take gas from the Dahej from Dabhol to that particular area of Gopalpur. Because then the tariff charge will be of INR 314.
So even for the other suppliers of gas, like GAIL, IOCL, whomsoever is there, it will be prudent to use gas from Gopalpur terminal because that will fall in Zone 1 and tariffs will be hardly INR 40 per MMBtu. Through swapping arrangement, that terminal can be used. So whatever gas they are having, supposed GAIL has some gas in the Dahej terminal, they can take it from Gopalpur and give that gas back to us, and that gas will be supplied from Gopalpur to customer of GAIL or any IOCL or BPCL.
So that swapping arrangement I think will also help us in further utilization of Gopalpur terminal. So that's what I'm saying. It's not only us that who has to sell the gas above the capacity, capacity of course, will be booked to the extent possible.
But then they will have the comfort customers, consumers will have to comfort that at least they'll be charged Zone 1 tariff if it is supplied from Gopalpur.
So what I'm saying that I'm not commenting on Dhamra capacity book, of. Course, they have good capacity. But we have ample chance there because a lot of CV entities are coming up in that area. And of course, into 3, 4 years, they should be ready.
So I think that 1 area will also have some -- it will also drive us more consumption of gas in that region. So -- and moreover, LNG, as I said, the LNG can be used as transport in that reason, even for the mining equipment and the machinery and transport vehicles. So I think that is the thing we are keeping in mind. And it's always -- when something new is done, it is always apprehended that how it will run.
When Dahej was first time, in fact, established in 2004. Then also a lot of apprehension was there on how the terminal will run. But everything is run because now the Government of India policy is very clear. They have to increase the share of natural gas from 6% to 15%. And 6% to 15% means that fourfold increase has to be done from the current level of consumption of gas.
And that is not possible -- that is possible only if we increase the volume of imported gas because domestic gas availability is not available to that extent. So all these things run on these things that we have anticipation, and more and more customers would be coming in that region. So it's not that Dhamra will not run, Dhamra will also run and we will also run. So I don't see any apprehension in proper utilization of Gopalpur terminal. It will be utilized. But we are making efforts with our customers for booking the capacity also in Gopalpur terminal.
Understood. Sir, there's 1 last out peering question. Can you repeat the inventory loss and the any trading gain or loss.
We have told you that this quarter, we have incurred an inventory loss of INR 107 crores and trading gain in this quarter was INR 14 crores.
Ladies and gentlemen, due to time constraint, that was the last question for today's conference call. I would like to hand the conference over to the management for closing comments.
Thank you very much. And in fact, I really appreciate all of you that you have all raised very relevant questions. And of course, whatever things have been pointed out or what ever has been suggested, we always keep in mind that what is the impression of the investors and analysts. And of course, we do the best of everything.
As you know that our constant effort is there, that we increase the volume throughput and which is increasing also. And only thing you have to have trust on us because what we are doing best possible thing we are doing. And this is evident from the market also, which has increased substantially.
And I guess we want that you have the full trust in us and will continue to perform better in future also. And as far as the competition is concerned, I again say that there is no competition. Our terminal will continue to run even better than what it has been done now and it will further increase in the future because overall consumption of gas is going to increase in the future.
So keeping all this in mind, our future is bright, and we hope to maintain our growth trajectory in future also. And this is my perception that will perform better in the future than what we have done this time now. Thank you very much.
On behalf of PhillipCapital (India) Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.
Thank you very much.