Petronet LNG Ltd
NSE:PETRONET
Petronet LNG Ltd
In the bustling corridors of India's energy landscape, Petronet LNG Ltd. stands as a pivotal player, forging a crucial link between global energy markets and India's burgeoning demand for cleaner fuels. Established in 1998 as a joint venture promoted by public sector undertakings like GAIL, ONGC, Indian Oil, and Bharat Petroleum, Petronet has transformed into one of India's leading suppliers of liquefied natural gas (LNG). The company operates primarily by importing LNG from international suppliers, leveraging its robust infrastructure to receive, store, and regasify the liquid fuel at its terminals in Dahej, Gujarat, and Kochi, Kerala. These state-of-the-art facilities transform chilled liquid gas into a gaseous state, making it suitable for transportation through pipelines to a diverse range of consumers, from power plants to fertilizer manufacturers and city gas networks.
The story of Petronet LNG is intricately woven with India's energy strategy, as the nation seeks to balance its energy portfolio and reduce its carbon footprint. The company generates revenue by charging fees for the reception, storage, regasification, and transportation of LNG, thus functioning on a tolling model. Additional income streams are drawn from long-term contracts with global LNG suppliers, exemplifying its strategic partnerships and keen insights into the evolving energy markets. By ensuring a steady flow of LNG, Petronet not only fulfills a critical need for natural gas but also aligns itself with global sustainability goals, propelling India toward a future less reliant on coal and oil. This strategic positioning has enabled Petronet to reliably cash in on the market appetite for cleaner energy sources, reinforcing its status as a vital cog in the nation’s energy transition machinery.
Earnings Calls
In their latest earnings call, Petronet LNG reported a slight increase in profitability with a PAT of INR 867 crores, up from INR 848 crores. Despite a minor decrease in quarterly throughput to 213 TBTU, the company achieved record throughput of 729 TBTU over nine months, showcasing growth from the previous year. Notably, management expects throughput utilization to remain between 95% to 100%. They provided guidance for future capital expenditure of INR 3,000 to 3,500 crores for petrochemical projects, with expectations for an ongoing 25% rise in LNG imports, setting a positive outlook for the company.
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Good morning, everyone, and welcome to Petronet LNG's Q3 FY '25 Earnings Conference Call hosted by Macquarie. For the discussion today, we have with us the management team comprising Mr. Vinod Kumar Mishra, Director of Finance; Mr. Rakesh Chawla, Group General Manager and President, Finance and Accounts; Mr. Gyanendra Sharma, who is the Group General Manager and President, Marketing; Mr. Vivek Mittal, Chief General Manager and Vice President, Marketing; Mr. Debabrata Satpathy, who is General Manager, Finance and Accounts; and Mr. Vikash Maheshwari, who is Deputy General Manager, Finance and Accounts.
So with that, I would now hand over the call to the management for their opening remarks, and then we'll follow it up with a question-and-answer session. Over to you, sir.
A very good morning to all of you. And as you know, that we have been surprising you every time whenever we give the results. Although our throughput has not been that high as it should have been.
And if you look at the throughput in Dahej, this time, it has been 213 TBTU as against 225 TBTU in the previous quarter and 218 TBTU in the corresponding quarter.
The overall throughput has been 228 TBTU, including Dahej and Kochi this time. And this is against 239 TBTU in this quarter and 232 TBTU in the corresponding quarter.
If you look at the 9-month result, it has been highest ever. And the total throughput in Dahej has been 686 TBTU as against 646 TBTU in the previous 9 months -- previous year's 9 months. And overall throughput has been 729 TBTU as against 685 TBTU in the corresponding 9 months of the previous year.
And if you look at the financial result this time, it has been INR 1,169 crores as PBT this time as against INR 1,140 crores of PBT being this past corresponding quarter and INR 1,191 crores -- sorry, INR 1,597 crore in the corresponding quarter. And PAT has been INR 867 crores in the current quarter as against INR 848 crores in the corresponding quarter and INR 1,191 crores in the previous quarter -- sorry, it has been INR 867 crores in the current quarter as against previous quarter of INR 848 crore and INR 1,191 crore of the corresponding quarter.
And if you look at overall 9 months result, the PBT has been INR 3,829 crores as against INR 3,761 crores in the previous year's 9 months. And PAT has been this time, INR 2,856 crores as against PAT of INR 2,799 crores in the previous year's 9 months. So this is the financial result.
And as you know, that throughput has been less, plus we have been able to get higher profit than the previous quarter, although it is very marginal. Thank you very much. And now house is open for the questions.
[Operator Instructions] We'll take the first question from Puneet Gulati. Puneet, you seem to be on mute. Can you unmute and ask your question, please?
Yes. Can you hear me?
Yes.
Okay. Great. So, I think, my first question is on the volume side. So while your total volumes have still been decent, but what we are seeing is that the long-term volumes have been below 100 TBTU. It used to be higher than that, both in FY '23, '24. So what's driving this bit of slowness on the long-term side for Dahej? Any thoughts?
Okay. So if you look at the volume in Dahej, TBTU has been lower as compared to -- you are saying that it's compared to corresponding quarter, slower?
Yes. I mean, just as a trend also last 3 quarters have been 96 to 97 TBTUs. The previous year was 100 to 170 TBTUs and even FY '23 was 100-plus TBTU.
I think, volume-wise, if you look at long term as per scheduling we are good, as per ADP, we are getting, because long-term volumes slightly maybe here and there, but normally, it remain same, because it's a scheduled arrival of the cargoes. I don't foresee any fall in that, but of course, the spot and the other cargo, which are coming, in several cargoes, they are affected by, the point just, prices being higher or lower. So that will be there. But otherwise, long-term cargoes maybe slightly lesser, but it doesn't matter, because it's as per the annual delivery schedules. So, not much different from the previous quarter, but of course, from the corresponding quarter, it is less.
Okay. Second question is on the, your UoP dues. Any progress there? We noticed that there is another one for CY '27 as well, it's INR 117-odd crore. Any progress on what the offtakers are now willing to pay? You had a bank guarantee. Can you enforce that? Any further thoughts there?
Yes, that guarantee is there. And in fact, we have already informed all the offtakers. They will reply by 31st March. We will send the letters that we are going to invoke the bank guarantee. But at the same time, they have sought some time till 31st March, because the bank guarantees are valid till 31st March. It's already -- a period of hardly 2 months that we have to wait. And thus, they will pay the use of the charges for '21 at least.
Understood. That's helpful. And lastly, if you can share the revenue for services part of the business?
Regas services, I think, it is INR 680 crores.
600?
INR 680 crores.
We'll take the next question from Amit Murarka.
So first question is on, on the Dahej Terminal expansion. So, it's now just [Technical Difficulty]
Amit, we can't hear you properly.
Amit, you are not audible.
Is it better? Is it better now?
Yes, better now.
But before that, there is a clarification, this regas revenue have been INR 840 crores, not INR 680 crores, as I mentioned earlier. Just a small correction is made here. Amit, now you can continue.
Yes, yes. So I was asking about Dahej Terminal. You have -- just round the corner on the 5 million tonne expansion and the current capacity kind of at least in Q3 has not achieved 100%. So I was just thinking what's the plan on the ramp-up of this 5 million tonne and how much of this is under firm offtake agreements? Just could you provide some clarity on that?
This, in fact, if you look at the capacity utilization, it has been 93% this time. We hope this will -- and will continue. But as far as the expansion is concerned, we are looking forward to have capacity booking on that also. And certainly this time, because you see in the first quarter, we were not able to have the more cargoes, because of the constraint in capacity. Of course, utilization will be there. Let's wait for some time, because this capacity will be in place, maybe by June, I think it should be in place.
Before that, we should be able to do some booking for the capacity also. We are looking forward for that, and we are talking to the offtakers to book more capacity in our terminal. But it may not be 100% or 5 million tonnes, but it could be maybe 40%, 50%, or so, that will be good enough. We will have more capacity to regas more spot volumes coming in future, because in the future, the growth is already there. More contracts are also coming, but at the same more long-term contracts have been signed. So I think, there is a chance that more cargoes will come to our Dahej Terminal in the future. And we are hoping for capacity booking also to the extent of 40%, 50%.
And would you be able to at least give ballpark guidance or probably can think of a ramp-up on this 5 million tonne between, let's say, year-on-year to FY '26, FY '27?
Cannot be told exactly how much will be the ramp up. We are ready from the day 1, that it will be possible.
The ballpark is also okay, like, are you thinking about 30%, 40% for FY '26 and maybe 60%, 70% for '27?
Right, that it may happen.
But, it is also a subject of what the international spot prices are. As you know, Indian market is very, very price sensitive. So like last summer we saw, with the prices softening, there was a lot of utilization. We were doing more than 109%, 110% of our capacity. So if we achieve those kind of prices, which is expected with the coming of new liquefaction plants in the, specifically, in the later half of this year. So if prices soften, then utilization level, of course, increase. And because of the competitiveness of LNG increases vis-a-vis alternate fuels. So let's hope there is the prices soften, which will help us in utilization and increasing share of gas and LNG basket also.
Got it. And on the petchem again, are you providing any CapEx outlay now? I mean, in terms of year wise, I mean, you were saying that even FY '25 CapEx, you were saying that, you will come back maybe closer to year-end. So what's the expectation on CapEx now for FY '25 and '26?
Right now, we see, this year, it has been almost INR 340 crores. We expect at least 15% -- 10%, 13% of the CapEx, maybe to INR 3,000 crores, INR 3,500 crores. This is the expectation for the next year, financial year '25-'26.
Sure. And just if I can ask one last question. You've also announced some contracting on the polymer capacity under Dahej Terminal. So could you provide some more details on that? Like what kind of pricing is there? Is it like based on some last quarter average pricing? What are the pricing terms on that contract?
You are talking about this polymer -- Deepak Phenolics, topic?
Yes. Yes, Deepak Phenolics part.
I think, we cannot disclose, because this is something which is between the two parties. But this is the price which will ensure us that we are always having some margin by selling the propylene. There is no chance that we will be losing anything on this.
And it is linked to international prices?
Yes. International price is linked. So we cannot give the formula exactly what is the formula for that. But of course, it will be at par with any international price.
So it's not a cost-plus contract. It's linked to international prices, then?
It's not exactly the same as you are saying. But as I said, this is more dependent on Southeast Asia. That's right. So it's more like that.
We'll take the next question from Maulik Patel.
In last 2 years, GAIL, and IOC and GSPC have signed a few of the long-term contract largely starting from 2026. I think, one of the contract of GAIL has also started in this month also. Has any of this volume is going to come to Dahej or Kochi? Has any of this discussion happened with this GAIL, IOC or GSPC on that?
Yes. Of course, volume will come to us also, because it's not that whatever volume they have signed with -- will be there other tenders, it's not possible to utilize entire volume over there. So definitely, our tender will be utilized. As I earlier said, that our capacity is going to expand by 5 million tonnes in the next 4, 5 months. So then, it will be utilized for that purpose.
Of course, as I said, that more long-term contracts mean more volume to Dahej. See, it's not possible to utilize additional volumes in other tenders. Looking at the kind of capacity or utilization level at other places, because consumption is not that high, along that tender. So if you look at Dahej, there is huge potential for the consumption. So whatever volume is coming long term after '26, definitely, it will come -- majority should come to us, we know, at least 50% of that should come to us.
So, you mean that approximately, there's a 4.5 million tonne of long-term volume has been signed by these three players, you expect approximately 2 million tonnes to come to Dahej, additional volume?
Maybe, but I cannot give the figure exactly. But sure that, we hope like that. And then, I have said that we are trying to get the capacity booked and offtakers know that they can bring more volume here. So, maybe that 40%, 50% of the volume, which has been forced away will come to us.
They need to put the capacity to Dahej, right, the additional capacity, which they have not -- or are you in discussion to book that additional capacity?
We are in discussion always that whatever capacity is available, they should book it, because it's in their interest. Because, otherwise, whenever they will have additional volumes, it will not be possible to get the slots they want. So we are in discussion with them. Let you know.
Yes. And just one bookkeeping question. What's the trading or inventory gain in this quarter? I probably, I have missed if you have mentioned it earlier.
Trading gain is INR 26 crores and inventory gain is INR 83 crores.
This inventory gain is related to that Dahej internal consumption, which is 0.7%, which is being taken by and which has allowed you to take for internal consumption. Is this inventory gain related to that?
There has been a movement in the prices, as you know, from the last quarter to this quarter. It is largely because of the movement in price.
We will take the next question from Shubham Shukla. We can't hear you, Shubham. We'll take the next question for now. We'll take the next question from Shivam Sharma.
Hello. Am I audible?
Yes, Shivam. Please go ahead.
Yes. So I have two questions. Essentially, first question is understanding the tax structure, which is valid for Petronet, once it gets -- where once it's imports the LNG cargoes from countries like Qatar Gas, et cetera, basic custom duty and SWS, we also pay that. And when you sell this gas to companies like GAIL, what is the kind of VAT, et cetera, which you pay? Because the motive for me to ask this question was to understand the impact of GST for Petronet, once the natural gas comes under GST.
And the other question stands at that, we have seen about 25% growth Y-o-Y of LNG imports. Yet it is not reflected in the kind of volumes you are showing this quarter. So what do you think has been the bottleneck in order to revamp the volumes according to the revamping of the LNG imports in India?
First question, I will answer that, what is the tax structure. As you know that natural gas is not under GST as of now. We are, in fact, pursuing Ministry of Petroleum and then Ministry of Finance that, it should be included, because this is national, and it will give a lot of comfort to the consumers. I think that, it is going on, discussion is going on and maybe government is keen to include it.
So Petroleum is continuously following with Ministry of Finance for bringing this under GST. As of now, it is not there. So, in Gujarat, the rate of VAT is 15%, which we are levying on the offtakers and selling RLNG or LNG.
And locally, they are taking gas to other states also, these offtakers. They are again charging VAT while selling it to their consumers -- their customers. So this is how tax structure is.
And of course, as I said, that VAT 15% is a big problem in Gujarat, because, it is, in fact, is levied. And again, that state tax wherever gas is sold again by our offtakers, they are again paying VAT of that state. So it's a cascading effect of the VAT, which is there. And I think, that has to -- anomaly has to be removed and this can be done only through inclusion of natural gas under ambit of GST.
So this is how is a tax structure. And in case this natural gas comes under GST, it will be huge benefit to the ultimate consumers, because that cascading effect of tax will go. And they will be able to get the input tax.
And Kerala, where we have Kochi Terminal, and the rate of VAT is 5%. So there, it is not that high. And most of the gas is consumed in Kerala or nearby towns or cities, so I think, Kerala, there is not an issue, but the gas coming from Gujarat has a VAT of 15%, which is very high.
But this is something which needs to be paid by the off-takers, right? The VAT does not get levied when you import the LNG from companies like Qatar Gas. When you sell it to GAIL, when you sell it to offtakers...
Then only it is levied. Absolutely.
And do you get some kind of credit also, input credit or the off-takers get some kind of credit also when they take the gas to some nearby states like Delhi or even if they take the gas to, let's say, somewhere some place in Gujarat itself. Do they get input tax...
Gas consumed in Gujarat, they may get some input tax rate. But for the gas taken away from the Gujarat, means, which is not used in Gujarat, they don't get any input tax credit.
Understood. Understood. And the second question was, again, the impact which you see, the 25% growth of LNG imports was there Y-o-Y. But yet we see a decline in the utilization for your terminal. So why do you think that the utilization has not ramped up according to the imports volume?
This is not -- Shivam, this is not correct. Looking at quarter-on-quarter basis, it may be lower. But if you look at the 9 months period, we have 686 TBTU brought in Dahej as against 646 TBTU in the 9 months of the previous year. So there is a growth. So saying that the volume has reduced in this quarter, don't compare only this quarter. You take the 9 months period from April to December. You will find that, we have brought more than last year. This is the highest ever throughput of 729 TBTU including both the terminals, in this quarter after taking the -- all the 3 quarters, April to December. So don't compare quarter-on-quarter, this is because we can [indiscernible] also to the off-takers that they can bring within the calendar year till December. So they bring as per their convenience. But if you look at the 9 months period, the time that we have 686 TBTU even you brought in Dahej as against 646 TBTU brought in last year 9 months.
In Kochi also, it has been 43 TBTU in 9 months as against 39 TBTU in the last year 9 months. This is the difference. So, we have growth trajectory you see.
Isn't that more or less in line with the growth of India's LNG imports?
In line with India, the LNG imports. So I think, there is no concern on that account. So don't compare each quarter as a stand-alone. Look at that overall in last 3 quarters.
We will take the next question from Pratyush Kamal.
Hello? I'm audible, right?
Yes, Pratyush, we can hear you. Please go ahead.
So my question stands out that, I wanted to understand of the gains which you get on the marketing and the margins other than the regasification charges which you put on the off-takers. So I just wanted to understand whether the margins are put on -- just on the spot cargoes and also on the cargoes which is back-to-back linked 7.5 MTPA contract or the 1.4 MTPA contract with ExxonMobil. So how does it work? Rather than the regasification charges, the service charges, how do you make the other margin, the trading margins?
Long-term contracts, as you know, that these are back-to-back contracts. And there is no marketing margin charge on value. It's only the volume which we are selling, in fact, to -- for the short-term basis. We are charging some margin. But otherwise, if you look at, it's only the regasification charges, which are there, which is charged. There is no other marketing margin charge for the long-term contract, including this 1.425 MMTPA long-term contracts. It's only the spot we see in our short-term gas we see and that we charge a marketing value. But long-term contracts are back-to-back. There is no marketing margin.
Understood. And what is the kind of provisioning reversal which we can see this quarter and a few quarters beyond this for FY '21 and '22? And what is the update on the FY '23 UoP charges?
If you look at 2021 provisioning, if you look at, we even made total provision till date of INR 315 crores. Out of the total INR 360 crores. So 87.5% of the provisioning is already made, and we expect this to be realized by 31st March, hopefully, when we get this money. So that we will gain, because we have made the provision to the extent of INR 315 crores. If we get the money against the Use or Pay charges, this will be adding to our bottom line.
And you are saying about, this year's Use or Pay charges?
Yes.
That is INR 117 crores only. And what is good part that the defaulters have considerably reduced this time. Earlier here, you must have seen four or five off-takers, all had defaulted. But this time, only one customer has defaulted, that is BPCL, INR 117 crores. Otherwise, all have complied with the contractual obligation this time. There is no default in many accounts.
So whatever concession we are making is just to discipline them, so that in future, there is no default. Maybe last 2 years, 3 years, we have given them time to bring the volume and get it waived. But at the same time, we have said that this contract is a long-term contract for regasification. As we have to, in fact, see a kind of discipline in the contract and if they are -- they fall in line with our dues issue, then perhaps there is no reason why we should not give some kind of relaxation in the past period, which is evident from this time because they have utilized the entire contractual and they have complied with their obligations. As per the contracts, only one customer has defaulted. So hopefully, next year, that will also be not there.
But the FY '21-'22, you do have the bank guarantee, but what about the FY '23-'24 defaults if any? FY '23, we don't -- there was a default. So what about those defaults, like how do you planning to recover the amount which has been defaulted since you don't have any bank guarantee?
Yes. Pratyush, this 2023 also, we have got the approval of the board yesterday. And we are going to give the same kind of mechanism to bring the volume in the next 3 years, maybe by December '26 for '23 also. So this kind of dispensation we have agreed and perhaps they will provide us bank guarantee and indemnity bond. And thereafter, this particular mechanism will be available to them. So similar to '21, '22, '23 will also be there. So this is the mechanism for recovering INR 610 crores. As I said, this year, it is marginal INR 117 crores. Hopefully, next year, there will not be any defaults.
Understood, sir. And how does this provisioning work in the accounts? You make the provisions for the amount which has been defaulted. And whenever you get the money, you reverse that provision. This is how it works or is it different?
Yes. So, we are waving off the -- whatever Use or Pay charges are there. They bring additional volumes over and above the annual contractual commitment which they have made, which bring the default quantity over and above this annual commitment, then we adjust to that and send the Use or Pay charges for that year, maybe '21 or '22. So this is like this.
We'll take the next question from Sabri Hazarika.
Am I audible?
Yes.
So a few questions. Firstly, I mean, you -- regarding your CapEx, you said you'd be doing INR 1,500 crores this year, right? And next year will be INR 3,500 crores, was that right?
This year may be around INR 1,500 crores, because we have already spent INR 940 crores odd -- INR 976 crores till 9 months. Maybe it was, you can take it INR 400 crores more, that is INR 1,400 crores to INR 1,500 crores.
And how much will be on Petrochemicals, out of this INR 976 crores?
INR 340 crores.
INR 340 crores.
Maybe, it may further go maybe INR 500, it may happen up for March, up 2 months.
Okay. Fair enough. Secondly, you gave this number, INR 840 crores of regas service income. So this includes the take-or-pay also, right, that INR 117 crores is also included here. Is that right?
Yes. Yes.
Okay. So pure service income will be basically INR 840 crores minus [ INR 107 crores, ] if we have to compare it with the volumes.
Yes. Yes, yes, you can.
Okay. And -- and early once -- I mean, you have mentioned that INR 315 crores of provisions you have made. So as soon as the bank guarantee gets encased, in the books of accounts also, we will see INR 315 crores basically as a provision reversal in other expenditure for that particular quarter. So that is how the earnings will show, right?
Yes. Yes.
Okay. Okay. Fair enough. And lastly, sir, book-keeping questions. I think, on volumes in Dahej and IndAS numbers actually.
Per tonne volumes, YTD is 13 TBTU. You can derive the quarterly number.
Right. And IndAS numbers?
Is INR 160 crores positive at gross margin level.
This is for quarter, right? Yes. Yes. Okay.
And INR 53 crores of ForEx loss, INR 7 crores positive at the other expenses level, then depreciation INR 82 crores and finance cost, INR 64 crores.
Okay. Okay. Got it. So INR 32 crores. And this other expense, does it have anything further other than ForEx loss?
No. Some small leases are also there, which are affected, and the impact of that is taken in the other expenses. And the lease for the charters -- time charters, which bring the LNG, that is coming on the gross margin level.
We will take the next question from Mayank Maheshwari.
Sir, first question was on Chemicals. In terms of the progress, can you just talk to us about where we are on the progress? What has been done? What's kind of going through in fiscal '26 for you?
And the second question was related to Dahej, you talked about 40%, 50% utilization rate. So in your time frame on the next 3 to 4 years, how do you see the capacity mix between spot versus contracted for Dahej eventually panning out?
Question is regarding Petrochemical. So as you know, that we are already going in May, and most of the things have been finalized in terms of long lead items. And we are in the process of placing orders for Petrochemical, maybe in our extent, these items will be ordered right now, but it takes time to get those items, because it takes some time. But we shall be ordering this. We have already finalized and given it to our PMC India Limited. We are now doing the tendering for placing of the orders.
So as far as the CapEx is concerned, as I said, we expect INR 3,000 crores to INR 3,500 crores of CapEx next year for Petrochemicals Complex. And as you know that we are also tying up with the lenders, and we are in the process already, we have appointed a consultant who is doing this job, and we shall be doing the financial closure for financing of this project. As we have already told you earlier that it can be 70-30 debt CapEx. So, probably this will be finalized within the next 3, 4 months. And thereafter, we shall be ready for any kind of CapEx. But initially, as you know, the CapEx will be hardly 15% or 20% for first year, '25-'26, and then if we ramp up to 30%, again next year to 35% like that, it will be there.
So we expect that this year, there should be CapEx of around INR 3,000 crores to INR 3,500 crores for the this Petchem project. And we shall be going in a big way very shortly, because we have already made the preparations. And as soon as the orders are placed, and we shall be going to get a movement and thereafter, we shall be buying the contractors to start this work.
Sir, on the imports, especially on ethane and propane, is there any more progress that you have been able to make in terms of long-term contractual terms there? Has any progress being made for that?
Yes, in the process and very shortly, we will come to know that what we are doing. We are rigorously following up with the buyers for contracting. Only issue is that, for ethane, as you know that we have to get some kind of tie-up, because right now there is no retail agreement with the off-takers. Unless there is a tie up, we cannot do long-term agreement for ethane, because there is another model which has been discussed, maybe that off-takers may bring their own ethane volume, we shall be doing only handling of this ethane.
So this may happen like LNG -- this may so happen. But otherwise, we are also ready for the kind of sourcing of ethane and then supplying it to the off-takers. As you know that one of the customer, OPaL, is there for ethane. And right now, because we have a contract with RasGas, we are getting rich gas and setting C2C3 and giving it to ONGC and ONGC supplying to OPaL.
But going forward after 2028, Qatar has not committed any rich gas. So there is a difficulty for OPaL, because when they do not get the rich gas, we cannot expect C2C3. So that's why we are pursuing ONGC that they should tie up with us after 2028, we can import the ethane also and supply to them, because it's in proximity to our Dahej plant. It is possible to supply from our Dahej plant and it's easier to get it, because we have our own jetty, third jetty is being constructed. Work has already started for third jetties, which can import the liquid hydrocarbons, ethane, propane as well as LNG.
So I think, as soon as the agreement is signed between OPaL and PLL, we shall source ethane. But as far as propane is concerned, we are looking forward to tie up for sourcing of the propane, either short-term or midterm or maybe long-term basis. This we have to see which is more beneficial.
Got it, sir. I think, on the ethane front, I think, there has been quite a few petrochemical companies in the region who have been telling us ethane carriers has been a bit of a bottleneck. Do you see that as an issue when you're kind of trying to kind of contract, whether you are for your own purpose or for third party as a logistical challenge?
Ethane carrier is, of course, a challenge, because there is no ethane carrier available readily in the market. So we will have to order that ethane carrier. But only thing is that if some off-taker is bringing its own ethane, then we need not order for that ethane carrier also. But in case we agreed to sign an agreement with us to supply ethane as well as handlings of the ethane, then certainly we will also order the ethane carrier. And that will be possible only after there is a tie-up with the customer. Otherwise, we will not do that, because there is no need if we are not importing ethane.
Got it. And sir, the last question on...
Sorry to interrupt you. I request you to please join back in the queue in the interest of time. We'll take the next question from Amber Taneja.
Can you hear me?
Yes.
Sir, please talk a little bit about two things. One is, what kind of pricing environment do you see for short-term cargoes, let's say, in the next 6 months, 12 months, 18 months, whatever you think is worth sharing with investors. And number two, can you talk a little bit about FX impact? Because we've seen some other companies that are in two imported products. They have -- some of them have been able to pass on, some of them have not been able to pass on 3%, 4% depreciation. And I think widely expected that 4%, 5% next year as well. So anything in your contracts to protect. So appreciate if you can talk about these two things, spot prices, any term prices and FX?
So as far as the spot price is concerned, it is likely to remain in the range of $12 to $14 in the next 6 months. This is our anticipation. But as I said, the future going forward, if you look at the capacities which will be available to the international market, after 2026, we are hoping that these prices should be in the range of $7 to $8, because the capacities which is coming more than 200 million tonnes of capacities are coming after '26-'27, I hope that there will be glut of LNG in the market. And when there will be glad, certainly, its benefit will be to the consumers and the countries who are consuming the LNG.
Sir, when there was a previous glut when gas went to $3 before COVID, then why did we not either buy some stakes in upstream or sign some new term contracts? I mean, that time went without us taking advantage, right? So I mean, is there a real benefit to having a glut without us taking action?
Not like that. That glut was there because of COVID. At that time, at $3 many plants are -- liquefaction plants are not sustainable. This -- if had there been a pricing of $3, many plants would have shut down. It's not that, it's a very viable price for LNG terminals, but $6, $7, $8 is still a viable price for the LNG liquefaction. Don't forget that situation, which is very abnormal.
Going forward, FIDs have been made. So I think, these plants will be coming up in next 4, 5 years, you will see the glut in the sense that, compared to the demand. I'm not saying this glut will always remain glut. Because first, there is a availability of more gas in the market, secondly, more consumers will be there. And as you know, the energy growth is already there. Consumption will already be there. So going up, energy consumption will be going up. So it will also match with the supplies, but only the pricing will be moderate.
I'm worried about pricing only. Indian market is quite sensitive. And whenever the prices are lower, consumption suddenly rises. We have seen in our case also, our terminal utilized maximum capacity, when the prices are moderate, had it been around $10, $9, our terminal would have been utilized more than 100%.
Pricing impact, which is there on our utilization, it's true for the India consumers that they tend to utilize alternate fuels if the prices of LNG. As I said, $12 to $14 still sustainable price, but it should be in the range of $7, $8. That's certainly the consumption of LNG will be much, much more in India and the consumers will be higher in India. So looking at the kind of capacities which are coming in future, I hope that it should be in the range of $7, $8 in the future. And right now, it is likely in the next 1, 2 years, you see it may range from $10 to $14.
Okay. And anything about FX?
FX, as you know, that our long-term contract, whatever foreign exchange exposure is there, we are passing it to the off-takers. So there is no foreign exchange risk for us. So I don't foresee any FX impact on us. But for India's purpose, we normally assess this impact, for that certainly, we are doing, because IndAS-116 is there, where we are doing the lease accounting. So for that purpose, we are accounting this foreign exchange impact, but not in case of LNG, where we are passing on the foreign exchange variation to the off-takers.
We'll take the next question from Rishabh Singh. We'll take the next question from Somaya B.
So first question, the annual price hike that we take in Dahej, for this year, have we taken it? What are the current tariffs in both Dahej and Kochi. And if you could share any time line that we are looking for, for this 2028 long-term contract tariffs?
Hike is there in Dahej, and we have taken from 1st of January, we have hiked our price of regasification by 5%.
What are the current tariffs both in Dahej and Kochi?
Current tariffs, probably, we are not disclosing, because [indiscernible] but only question, which has been answered that there is a hike of 5% from now -- for this year. And time line in the market, you can add it by yourself. We cannot disclose it.
Got it, sir. Sir, also this 2028 long-term [indiscernible]?
'28 long-term contract, we are, in fact, in discussion. And shortly after maybe sometime may take 6 months or maybe 1 year time. And as in, still there is enough time left for finalizing the contract. But they have committed that they will take entire volume on back-to-back basis, as has been done. In the existing contract that was signed with Rasgas and similar offtake arrangement will be paid there. Only thing we have to finalize certain terms of the contract. It will be very shortly, maybe 6 to -- 6 months to 1 year, it will be finalized and then we shall sign the contract and [indiscernible].
Got it, sir. Sir, second question on Kochi Terminal. So how do we see utilization? I mean, the Kochi Mangalore pipeline progress, how do we see it for the next couple of years? So from 20%, 25%, do we see it going to 40%, 45% in the next couple of years?
Yes. As far as the Kochi Terminal is concerned, as I had -- earlier conferences also, I have told, that this Kochi Bangalore section is yet to be connected and as of now, the connectivity from Kochi to Coimbatore is there, but from Coimbatore to Bangalore connectivity is still continuing. Maybe by June or June '25, it should be ready. Once it is connected to Bangalore section, there is a likelihood that utilization level will further increase, because then it will be connected to National Gas Grid.
And as you know, that once it is connected to National Gas Grid, we can swap the volumes and can sell our Kochi gas anywhere in India or any other customer also can take our Kochi gas and supply to the nearby customers. So that benefit will be there, because as you know that there is a unified tariff union already there.
So the Zone 1, the tariff is around INR 40. So if any customer like GAIL has any customer in this Kochi region or near the Kerala or near Karnataka, they will prefer to take volume from us by swaping this gas and then supply to the customer, because then customer will be benefited as there will be charged Zone 1 tariff of INR 40. Because they bring it from Dabhol and supply it to a customer in Karnataka or in Kerala and the Zone 3 tariff will be there, which is around INR 140. So it will be in the interest of the consumer that, they should get the gas from the nearest source available.
So it's not only me that I will supply the gas. It is also possible that any other off-taker, whether it be IOCL or GAIL or BPCL, they can take their volumes to be supplied in this region, Karnataka and Kerala from Kochi instead of bringing it from Dahej or Dabhol, for that they can give the competitive price of the gas to the consumers. So then, it will be utilized, I think, 40% to 50% is connected to National Gas Grid.
And sir, one clarification on the Petchem. You mentioned INR 3,500-odd crores of CapEx per annum. So what would be the non-petchem spend in FY '25-'26? That is one. And I mean, the time line for the Petchem startup, if you can just confirm it.
Petchem, as you know that this time, '24-'25, they are likely to spend INR 400 crores. We have already spent around INR 340 crores. Next year, we shall be -- we are planning to spend around INR 3,000 crores to INR 3,500 crores of CapEx for Petrochemicals Complex. And as you said, when it is likely to come up, our scheduled date is November 2027. So that is the time when it should be commissioned. And maybe by '28, it should be ready for -- I think this is the time lines for completion of Petchem project.
Non-petchem CapEx, sir?
Non-petchem, CapEx is around till 9 months, INR 636 crores.
I'm looking for FY '25-'26.
For '25-'26, it will be around [indiscernible] -- other than Petchem, it should be around INR 1,000 crore maximum. For major project, which is going on is, third jetty, for which contracts have been awarded and total contract value is around INR 1,904 crores. That is a major CapEx item going on. Part of that CapEx is only Petchem. As OPaL [indiscernible] will start as and when the approvals are there. So I think this is the basis, I think, INR 1,000 crores more, maybe INR 4,000 crores total CapEx may be there. INR 4,500 crores, including Petchem.
We'll take the next question from Nirmal Gore.
My question is a follow-up to the global LNG gas capacity that you've worked from [indiscernible] So I was -- just a clarification, when do you see this [indiscernible] I mean, is it second half of 2026 or 2027?
Nirmal, just repeat your question, your voice is not audible.
Am I audible now?
Now it's audible. Please continue.
Yes. My question is a follow-up to a previous question that you answered. I wanted to understand when do you see the gas not happening due to increased global LNG capacity. Is it 2026 2nd half or 2027?
It should be '27 onward, I think, because those are the plants that are under construction. And next 2 to 3 years, they should be ready for production. So, you take it '27 onward, because even RasGas is this, [indiscernible] energy projects are also likely to be completed by '27. So after that only this -- and ramp up also takes some time. So, maybe 2028 maybe the year, then there will be likely glut, but the real glut will be 2035. 2030 it will be there, 150 to 200 million tonnes of capacities will be there by 2030.
So that means, that 150 million to 200 million tonne capacities in addition to whatever is there right now. So I think that is what I was talking about. As most of the projects are under construction and after assuming the office by, assuming Donald Trump, it is likely that maybe baby drill kind of concept, as a production of gas and pipe in U.S., that will further promoting the production of gas in international market.
This $7 to $8 price that you were mentioning about that should -- we should see that in 2030?
We are expecting early. I'm not saying it will be $7, $8 in 2, 3 years. But maybe after '27-'28, it should be there. Because this Qatar energy capacity itself will be ramping up to almost INR 143 MMPPA from 77 MMPPA . They are doubling their capacity almost. So that means that there will be enough gas available in the market. So I'm talking about [indiscernible] the U.S. capacity that are coming up in a big way. That's why I'm saying 150 to 200 MMPPA will be there.
In the interest of time, we'll take the last question from Nitin Tiwari.
I hope I'm audible. Just make some clarifications I was seeking. So in terms of Use or Pay, right, given the provisioning we have made and the kind of Use or Pay charges that stand as of date. So now we are clear that no more cargoes can be brought in to make up for those charges. I mean, the time line for that was December last year. That understanding is correct?
Yes, it is correct. For '21 calendar year, this is over now. Whatever cargoes they are paying, they have not. There's no time left now.
Right. So whatever the charges are there for '22 and '23, they are still open for cargoes to be brought in against them. That's the right understanding.
They have time till December 25 on calendar year '23.
So sir, if you can just summarize for us in terms of what are the current Use or Pay charges that are outstanding? What is the provision that we have made against them which are now non-recoverable, I mean, sort of provisioning that we have done? And what is the recovery that we have done against the Use or Pay charges by the cargoes which are brought in? I suppose there is a figure which is given in the result release as well of INR 184 crores roughly. So is that...
That is the kind of waver we have done. This quarter, we have done [ INR 59 crores. ]
Correct, sir. So just like for keeping all of us on the same page. So what are the current Use or Pay charges, which are outstanding? And what is the provisioning that we have made? And against what are we expecting like other cargoes can be brought in for recovery, what amount?
So, if you look at the total Use or Pay charges, as of now are INR 1,666 crores, and we have made a provision of INR 702 crores. So around INR 963 crores, INR 964 crores is that, other than provision, net of provision.
So if we look at this '21 calendar year, I have told you clearly that there is no time left. So whatever charges are there at INR 360 crores, they are due for payment. There cannot be any waiver of the charges now. And as far as calendar year 2022 is concerned, INR 695 crore is there, out of which provisioning is already made to the extent of INR 295 crores.
But there is still time left for utilization of this capacity. We can still get this benefit by bringing more cargoes this year in December '25. And as far as calendar year 2023 is concerned, total Use or Pay charges are INR 610 crores, of which we have extended similar scheme that has been done for '21-'22. They will give the bank guarantee and the indemnity bond. And they can bring this volume till December 2026.
Understood. So the INR 184 crores that has been recovered, it has been recovered against the INR 360 crore Use or Pay charges of 2021. Right?
More exactly maybe '22 also. This is a combined impact, because we are giving impact for both the years. Some of them have defaulted at '22 already. So we have brought the cargoes, so '22 charges have been reversed. It's a combined '21 and '22, INR 184 crores.
Understood. So basically, your net INR 963 crores, which are now outstanding, cargoes can be brought in against this amount, because INR 700 crores is already provisioned for?
Yes, INR 700 crores has already been provided.
Right. And sir, I missed out on the inventory gain number that you mentioned for the quarter.
As I said INR 83 crores is the inventory gain, INR 26 crores is trading gain. Total INR 109 crores.
Right. And lastly, sir, if I may. So if everything remains same as far as pricing environment is concerned for LNG, so what is the kind of utilization we are looking at in FY '26? I mean, in terms of throughput. What are we looking at?
Initial level, as you know that this quarter, it has been 93%, but we expect this to remain in the range of 95% to 100%.
On the expanded capacity. That's what we are talking about. So, I'm looking for some guidance for the throughput, right?
Throughput is already highest ever in 9 months. So I think this will continue. We are always optimistic about our throughput.
Any specific guidance that you can provide in terms of [indiscernible] million dollar?
It's not my guidance, it's market, which has to, in fact, decide it. But we can only expect it, that it should be in this range. Accordingly, if you look at 9 months, it has been wonderful, as I said, highest ever volume throughput. So there should not be any challenge as such, as far as the throughput is concerned. And I said that 95% to 100%, I think, we already need to be utilized.
That was the last question. And before we end, on behalf of Macquarie, I would like to thank the management for the opportunity to host this earnings call. Over to the management team for any closing remarks.
Thank you very much to all of you. And as I said that -- we have been able to give a better performance this time as compared to previous quarter, this corresponding quarter. But still a lot we expected, could not done. But hopefully, in future, we will try to bring in more volume, utilize the terminals, more and more to the extent of, at least, 100%. And our effort is whatever is the expansion going to take place in next year, it should also be utilized to a great extent. So now the capacity utilization next year will be in terms of the expanded capacity. So we have to look at that how much we can utilize in future. But as I said that, we are committed to do to give the best performance. And thank you very much to all of you.