Ladies and gentlemen, good day, and welcome to the Petronet LNG Q2 FY 2025 earnings conference call, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there's been opportunity for to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kishan Gopal Munjal from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Hi. Thank you, Riddhi, and, good evening to everyone. On behalf of DAM Capital, I welcome all of you to Petronet LNG's second quarter FY 2025 earnings call. At the outset, I would first like to congratulate the management on the good set of results, and, to discuss the same, we have with us the Director of Finance, Mr. Vinod Mishra, Mr. Rakesh Chawla, who's the Group General Manager and President, Finance and Accounts, Mr. Gyanendra Sharma, who's Group General Manager and President, Marketing, Mr. Vivek Mittal, Chief General Manager and Vice President, Marketing, Mr. Debabrata Satpathy, who's General Manager, Finance and Accounts, and Mr. Vikas Maheshwari, who's Deputy General Manager, Finance and Accounts.
With that, I would now like to hand over the call to the management for their opening remarks, and then we will follow it up with a question and answer. Over to you, sir.
Okay, thank you very much. Good evening to all of you. First of all, I would like to point out that the Dahej throughput has been 210 TBTU, as against 225 TBTU, as against 210 TBTU in the corresponding quarter, and 248 TBTU in the previous quarter. If you look at the performance of the company this time, it has been better in first half, also it is better than the corresponding quarter. And the overall throughput that you see of Dahej and Kochi together is 239 TBTU, as against 223 TBTU in the corresponding, and 262 TBTU in the previous quarter.
If you look at the half-yearly performance, it has been 473 TBTU, as against 428 TBTU in the last half year H1 period, and overall throughput in six months has been 501 TBTU, as against 453 TBTU in the first half of last year. This is the physical performance. As far as the financial performance is concerned, this quarter, the PBT has been INR 1,140 crore, as against PBT of INR 1,102 crore in the corresponding quarter, and PBT of INR 1,520 crore in the previous quarter. The PAT has been INR 848 crore in the current quarter, as compared to INR 818 crore in the corresponding quarter, and 1,142 crore in the previous quarter.
This is the quarterly result which has been there. If you look at the half-yearly performance, it is INR 2,660 crore in this first half of current year, as compared to INR 2,164 crore in the H1 of last year. PAT has been INR 989 crore in this current quarter, as compared to INR 68 crore in the corresponding half year of the last previous year. This is the financial performance. The growth of profit from H1 of this year as compared to previous year H1, it is 23% growth is there in PBT, and 24% there in PAT.
As far as the quarterly performance as compared to the corresponding quarter is concerned, it is around. PAT is higher by 4% and PBT is by 3%. This is our physical performance. If you look at the utilization of Dahej terminal, it is at the level of 98%. Kochi terminal is at a rate of 22%. 98% is of course less than last quarter, which is around 109%, but it is more than corresponding quarter, which was around 96%. 92%, rather, in the corresponding quarter. It is better this time as compared to the corresponding quarter.
This is how it is there, and if you look at the dividend payout, we have declared INR 7 per share as dividend, interim dividend to the shareholders, and it is the same as it was in the last year. I think this is all from my side, and now the house is open for the questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. I hope I'm audible?
Yes, yes, you are audible. Probal, please.
Sir, two questions from my side. One is, of course, the QoQ decline was perhaps to be expected given the reduction in power demand, what we have seen in overall consumption, but just looking ahead for the second half. What sort of utilization should we be sort of factoring in, given, and what sort of spot LNG pricing environment are we actually looking at, at this point of time?
Of course, I am optimistic about it, and the second half, I expect it will be good also, because demand is growing, because prices are moderate at present, and it is likely to remain moderate, but I can't predict for the winter season. It may be slightly higher, but the winter is not that harsh. Certainly, the prices will also be lower. And if crude also remains at this level, which is now $75, $74, then long-term prices will be even down. So I think at present, if you look at the spot LNG prices, they are almost neck to neck with the long-term prices, and there is not much difference in the prices of long-term and spot LNG. So we hope that prices will remain moderate in future, and we hope that it will be even lower than what is now.
Hopefully, I am sure that the consumption will not be reduced. It will remain at a higher level, because you know that the Indian market is price-sensitive, and if prices are moderate, then consumption doesn't come down. We are hopeful that consumption will increase in the second half also. Accordingly, we are getting sentiment that it should be almost in the same range. We are expecting that it should be in the range of 95%-100% capacity utilization of Dahej. So this should continue. We don't see. We won't foresee any challenge.
Understood, sir. The other question was more about sort of the capital deployment. You know, if you can just give us a bit of an update on what is the effective, you know, capacity that we expect Dahej to be at by the end of this financial year. What is the update on the last mile connectivity of the Kochi-Bangalore, the second offtake pipeline? And thirdly, the status of the petrochemical project in terms of CapEx and investment, if I can have some color on that.
Okay. So first is the CapEx you are asking, and as I think we have already declared on the website and also on the stock exchanges, that we have commissioned two tanks in Dahej on first of October. So that means that we are getting more flexibility to operate now, and we can now store more cargo. That means it will definitely be adding to our bottom line. So this is a great thing to happen, because we are now able to have more cargo, and this will give us flexibility to process more gas. So this is one good news for the shareholders, that we have capitalized this two tanks and started storing LNG in these two additional. Our total number of tanks has gone up to eight complete.
This is one CapEx which has been there, which has been completed. Now, another project which is going on in Dahej is our Regasification this project this expansion of our capacity by five MTPA, and which is likely to be completed by March 2025, as per the scheduled completion time. If this happens, this will give us the flexibility and also will enhance the revenue of the company. Accordingly, it will add to the bottom line, but it will be in the next financial year, not this, because it's still going on. By March, it will be complete.
Right.
It is a low-hanging fruit, if you look at, because it's a CapEx of only INR 570 crore, which is only 10% of the greenfield terminal that all it is as we say today.
Mm-hmm.
So even if we are putting up this CapEx of INR 70 crore, maybe in a year or two, we will recover it. The payback period is very short, so it's a low-hanging fruit, and then capacity will be there, 22.5 MTPA. We are making all efforts to book the current capacity by the off-takers and anyone else if the off-takers are not taking full capacity. So that effort is going on. So this is one of the agenda we have. And other CapEx part, if you look at Kochi pipeline.
Mm-hmm.
Third jetty is also being awarded, has been awarded, so it is going on. Now, that third jetty will take three years time to complete. The offsite facilities and marine facilities, both the contracts have been awarded. So now it's a period of three years by which it will be completed, and it will be able to handle both, all three side of liquid hydrocarbons, propane, ethane, and LNG. So it's a unique jetty in the country, which nobody has. So we are hopeful that this will be complete by 2027. This is one part at Dahej, and then you are talking about Kochi.
Mm-hmm.
Kochi, basically, pipeline connectivity was an issue, and as I have reiterated in our earlier conferences also, that it is likely to be completed by March or maybe April next year, as has been communicated by GAIL India Limited, because that is the company which is laying the pipeline from that for that section. And as I said earlier also, that from the Kochi to Krishnagiri section is as well, and half of that, it's around 250 kilometers. Half of that has been already completed, but I think 120-125 kilometers is still remaining.
Mm-hmm.
So hopefully that will be completed by year end. So after that, it will be connected to the national gas grid. So that is a major thing which is going to happen, because after that, it can utilize the gas to any place, and gas can be fed for any other area, and if somebody wants gas at Punjab or Haryana, they can be supplied from Kochi, because physical movement of gas is not required if pipeline connectivity is there, and it is connected with the gas grid. So this is how it happens. So this will automatically increase the consumption level of Kochi, and more and more city gas distribution projects are going to be completed in next two, three years or four years maximum.
So there also, the demand will be increasing because domestic gas is allocated to city gas distribution companies, and it can be tracked with RLNG, and it can be supplied from Kochi, because again, there is a benefit of unified tariff of pipeline.
Right. Right.
So once tariff is there, then certainly anybody would in southern Indian cities like to have gas from Kochi terminal, because that will be within the range of 300 km, the government tariff will be charged. So swapping will happen once this Kochi terminal will be connected to the national gas grid.
Right.
So this we are expecting, and this will automatically raise the consumption or utilization level of Kochi terminal. So this should be your second question also. Third question is regarding petrochemical project. And that I just want to update that we have already awarded contract for PMC, and licensor contract has already been awarded, and now since PMC contract has been awarded, so PMC is now undertaking all the activities to make packages for different sections. And packages will be then awarded separately, and perhaps it has already started, in fact, making the packages. And then testing will be started, and the contracts will be awarded to the vendors, and this will be, I think this year it will be taking place.
But CapEx on this will be not too high this year, but maybe next year it will be high. This year only, this processing will continue because awarding the contract also sometimes takes more time. So that is there, and progress I have told you, and as you know that we are also lining up our lenders for this project, and we have already declared that the debt-to-equity ratio will be 70:30. And accordingly, we will be lining up with bankers, lenders, and we have started the process, and probably in next two, three months, it will be lined up. And thereafter, we'll be ready for making the payments and utilizing the loans from the bankers and also putting to equity of around 30% from our side. So this is how progress is there in Petchem project.
All right, sir. Thank you so much for that extremely detailed and useful explanation. Appreciate it. Thank you, sir. That's all.
Thank you very much. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir. Two quick questions. Sir, recently the GAIL is seeking a long-term import deals of closer to 5.5 MMTPA, and GAIL has also closed some LNG supply contracts of 1.5 MMTPA. In this case, can we connect the dots that our Dahej expansion will be ready by March 20 2025? And so is there any chance that the GAIL will book some capacity or any talks going on this side? This is my first question.
Yes, agreed. And, as you know, that, capacity, will be available by March 2025, and we are already in talks with our off-takers. But something concrete will be there, we will let you know. But at the same time, I can say that whatever new contracts are being signed by GAIL, IOCL, all have signed it. Definitely, much more and more volume will come to Dahej. This is quite sure, because the Dahej connectivity with the, demand center is so good, that anybody, whosoever is bringing volume to India, cannot ignore Dahej, because it has a capacity of around 25 million tons of evacuation, and it is connected by five pipelines. So, no other terminal has got this kind of, unique advantage. So I am hopeful whatever volumes are coming, it's, it's a maximum volume will come to the terminal also.
At the same time, we are also seeking our off-takers to book capacity in this expansion. Hopefully, we'll succeed, and if that happens, then to some extent it will be booked. Maybe that 5 million ton may not be booked, but we want to keep some capacity with ourselves also. Because as you know, even 17.5 MMTPA is sometimes falling short. And you know, last quarter we had to run almost 19-20 MMTPA of capacity. We have run to that extent. I am saying that whatever capacity we create, it doesn't mean if entire capacity is not booked, it will not be utilized. When we were only 17.5 million tons. At that point, at this point also, the booking is only 50.75 MMTPA.
This year, we utilize the entire 17.5 MMTPA, so it's not that unless until some long-term capacity is built, then only utilization will be ensured. Because spot and short-term gas is also there in the country coming. Because prices are moderate, so we will be able to utilize that 5 million tons. So it is going to enhance our bottom line. So rest be assured that we will try to book at least some capacity with off-takers or any other consumers or any other, LNG traders or, suppliers. But at the same time, we have the capability to utilize this capacity with other volumes coming in, like short-term, spot. That is also there. So hopefully, this, we will be utilizing next year, this 5 MMTPA addition. So this will automatically add to our bottom line, and profitability will increase next year.
Sir, second question is related to the Dahej Regas tariff. Every year, we increase the tariff by 5%, and as per the agreement with the promoters, who are mostly the off-takers at Dahej. How long can we continue to increase the Dahej tariff every year by 5%? That's one thing. Is there any clause which can pause or it can change the tariff increase in long run? That's the second. And, sir, we also wanted to understand the formula, if any, to calculate the Dahej terminal Regas tariff. Is it based on some percentage of return on equity or the return on capital of Dahej assets?
Okay. So first question is that how long we will continue to increase 5%? This is as per contract. See, it's not there that they have a choice, because it has been agreed to, and it's not in Dahej only. If you go any other terminal also, you go at Kamarajar, you go other terminals, they're also charging 5% every year. So it's not a question that how long they will afford. This is a contractual obligation, and contract is there for the capacity booking till two thousand thirty-six. So till two thousand thirty-six, it will continue. So it's not a question of any clause which is there, which can, where we can renegotiate it. It's not there. As per contract, we are charging. This is the answer to first question, and there is no answer to second question also, that there is no clause as such.
Only thing we can review every three years, that how much inflation is there, so it is only upward revision which is happening. It is never the downward revision which is going to happen. So this is my understanding of the contract, and we are going as per the contract. So this is how it is there. And the third question is regarding?
The third question was regarding wanting to understand the formula, if any, to calculate the Dahej terminal.
That cannot be discussed. This is something which we have to... Because these things are contractual and confidential things. We cannot give you the formula, how we calculate it. But it is a market driven, and if you compare it with any other terminal, it is the lowest tariff which we are charging.
Sir, as you just mentioned that, every three years, tariffs can be reviewed, if, if there is, any adjustment regarding to inflation. So any shortfall to the inflation, suppose the inflation is not going at a 5% every year?
It has not happened. It has not happened so far.
Okay. And sir, last one. Considering the last 10 months Regas volumes at the Dahej terminal, do you expect any shortfall from the off-takers for the current calendar year?
I don't think we don't expect these things to happen. These are contractual obligations. They will fulfill it. Prices are moderate, so they will fulfill the obligations. We are quite hopeful.
Okay. And sir, lastly, what was the CapEx during the first half FY 2025 and the planned CapEx numbers, if you could share for the FY 2025 and 2026?
CapEx, I have told you that it's going on, but details can be given, but I don't want to... So I think we are going well on CapEx side, and projects as it, it will be coming up, but certainly we have handsome CapEx going to happen in this year. And we will let you know later how much is that.
Okay. Thanks a lot, sir.
I can give you the CapEx, CapEx on which item we are going to incur. But financial year-wise, you say that it becomes difficult because it is still six months remaining for this financial year. Let it happen, and we will tell you.
Okay. Thanks. Thanks a lot, sir, and wish you happy Diwali to Petronet LNG management.
Thank you so much. Thank you. Same to you.
Thank you very much. The next question is from the line of Hemang Khanna from Nomura. Please go ahead.
Hi, sir. Thank you for taking my questions. I have a few of them. So firstly, margins for this quarter were a tad weak. Could you help us with some details on what led to this? And, what was the hit, if any, on the inventory and trading side? So secondly, on Dahej-
We have already declared that, utilization is lower than the previous, quarter. Because last quarter, there has been power demand, and that was very significant.
The utilization side is well understood.
It's a normal means operation, because we are operating. So I don't see any volume-wise it is lower, and margin, you know that tariff is already fixed, so it is as per that coming. And as far as the trading is concerned, trading margin has a [audio distortion]. And there has been inventory gain of around INR 70 crore this quarter, as against INR 261 crore in the previous quarter.
So inventory was INR 70 crore, and what was it on the trading side? Sorry, I lost the line.
Trading side, I told you INR 39 crore this quarter.
39 crore. Got it. And sir, secondly, if you could help us understand on the Dahej side, how are utilizations currently panning out for the month of October? Definitely, you've indicated 95%-100% for second half. But how is October currently trending?
98% is going on, so there should be
98. That, that's very reassuring, sir.
It will not be. It will be in this range only.
Got it.
But exact data, October, we cannot give. I send it in this situation, so we cannot declare on this phone call.
Got it, sir.
We will declare the result, but we will make an effort. It will be continuing in the same fashion, which is happening in this quarter, second quarter, in the range of 98%.
Got it, sir. That's, that's very reassuring. Thanks. And sir, lastly, on the tariff negotiation side, can you just share with us when is the tariff negotiation expected to be concluded? A rough timeline on that. And, what are typical hindrances, if any?
Nothing about.
So, on the new volumes that you signed.
New volume is going on. It's already. These things cannot be disclosed because these are confidential. This will happen. There is no challenge as such. We will be doing it, and it will be in a manner that will be good for the shareholders, and I don't foresee any kind of lower tariff from their side. It will be good tariff, and we will let you know whenever we sign the contract, but already all things are going on. This cannot be discussed on this call.
Got it, sir. Got it. Thanks a lot. Thanks for your detailed answers, and thanks and wishing everyone a very happy Diwali!
Thank you. Same to you.
Thank you very much. The next question is from the line of Maulik Patel from Equirus. Please go ahead.
Yeah. Thanks for the opportunity, sir. Yeah, just two questions. Can you just give some update on your Petchem expansion, and work has started or the appointment of the consultant, so any update on this will be really helpful.
Just as I mentioned, Petchem, we have awarded the work for PMC.
Hmm.
Working. Second contract, we have awarded contract for licenses also. So both PDH and PP contracts have been awarded. These are in place, and now PMC also has been awarded. So now PMC is now undertaking all the activities for sending the various packages, and then it will award the work to the contractors, and then the work will start in Dahej. So this is now. This is going on. The major thing was award of work to PMC contractor, which has taken place, and now everything will start. Slowly, the packages will come, and because this is a Petchem project, so multiple packages are there, and the contracts will be huge. So it takes time to award job. It's not one contract. It's many, many contracts will be there for different, different projects.
Utilities will be different, and other units will be different. So likewise, this will be there. It has started, so we hope that this year many contracts will be awarded. CapEx may take some time because if work will start in the second half of the year, so I think the payments will not be too high, but next year, the CapEx will be. Before that, we have been already engaging with our lenders, and probably in three or four months period, we'll be able to line up the lenders for taking debt. As I said earlier, the debt ratio, debt-equity ratio is seventy-thirty, so accordingly, we are going ahead.
Got it. Sir, just one more questions. So you in earlier question, you spoke lengthy about the renegotiation of the RasGas volume and the contract which you want to with an off-takers, right? Is it fact, we assume that before 2027, you can. And what kind of timeline you are looking to complete the negotiation with off-takers for this new contract of RasGas? Because you have signed a contract with Qatar, but you have to do with an off-takers. When that is likely to get complete?
It will be completed very shortly. It's going on. Anytime it can be completed, but only thing is, it's still, there is a three-year, four-year period left-
Correct
... for implementation of this, contract.
Mm-hmm. Mm-hmm.
So don't worry about that. It will be done before that, but only one thing I can assure you, that they have already undertaken to take the quantity within this contract. This guarantee they have taken.
Mm-hmm.
It is going to happen, but the period is long, so we are taking time, but it will be happening shortly. Maybe, in six-month time, it may happen like that. There is no issue as such. So because there is no urgency of that contract.
Mm-hmm. Mm-hmm.
So this, it may be taking time, but since the time is still left, three and a half year, more than three and a half years, so I don't foresee any challenge. As I said, that this volume is guaranteed by the off-takers. They will offtake this volume. That means our revenues are guaranteed, and it will be a reasonable revenue, it will be good revenue. And perhaps shareholders will always has appreciated us in terms of this kind of contract. And in future also, it will be like that. So I assure all the shareholders that this deal will be good, and there is no reason to apprehend anything that what is going on this, because it's a long time is left, so it is taking time.
I think that is what the investors worried about. And let me tell you, and we all know that the off-takers, so the off-takers will agree with the volume. So volume obviously, and the price at which the volume is going to come from Qatar to you, it is also being in consideration with an off-takers. What worries to the investors and others is it Regas tariff? And we are not concerned about revenue. Revenue obviously we get it. We're concerned about the gross profit.
This much I can assure you.
There is no decline, no decline in the Regas tariff, which you are charging?
Pardon?
Will there be any decline in the Regas tariff, which you are charging to the customers, let's say today, INR 62 per...?
Because nothing has materialized.
Sure, sir. Sure.
I cannot say, but certainly when it is finalized, then we'll come back to you and discuss this matter.
Sir, just one more question, and related to this expansion of the Dahej. Are you in a discussion or are you looking to find, you know, more volume to be placed on a long-term Regas capacity, which you have done in the past? And currently you have around 8 million ton of Regas capacity.
Making all efforts to have the capacity booked in our center. Because new volumes are coming up, and if you look at the total long-term contracts which India has today, share from suppliers are coming in 20 million tonnes, 21.2 million tonnes. But by the time 2027, you will find that it is around 28 million tonnes.
Mm-hmm.
So definitely volume will be coming to Dahej, maximum volume. What I'm saying, 1. 2 million will be starting from around 2026 , 2027 from [audio distortion] . So I, what I'm saying, that future is very optimistic because gas utilization is bound to increase. And as the government of India focus is also to increase the share of natural gas from 6% to 15%, that's why there is a huge potential for growth of LNG business. And if you look at different segments also, there is in transportation sector, it is also coming up in a big way. So this alone has a potential of consuming almost 10 million-12 million ton, if it comes in the way, as way that China has already implemented this ecosystem. So I think in India, there is huge potential for LNG consumption.
Even existing sectors and more new sectors will come up, CGD, entities will come up. So I hope that this, our LNG consumption will further increase because domestic gas availability is a hindrance. It cannot be increased substantially.
Sure.
So there is a limitation of domestic gas, and consumption is growing, so growth is only likely in LNG sector.
Mm-hmm.
This is what is a good thing for the persons like us or companies like us. Because we have hope that in future, because prices will not be high in future, reason being that more and more capacities are coming in 2023 onwards. So almost up to $150 billion-$200 billion of liquefaction plants are coming up across the globe. So the supplies are likely to be more than our demand.
Mm-hmm.
So definitely, the prices will not be too high. And if prices are not high, then LNG, LNG, LNG consumption in India is bound to increase. So this is an optimistic view.
Just one quick thing. What was the Regas revenue you charged in this quarter?
Pardon?
For the Regasified revenue, which you charged to this Regas volume service contract.
Quarter?
Yeah, this quarter.
INR 1,508 crore total. Trading and Regas volume.
No, no, I'm talking about Regas, Regasification service revenue charge.
Sales is INR 731 crore.
Fifty-one crore?
INR 731 crore.
Okay, got it, sir. Thank you very much. Thank you. I wish you all the luck.
Thank you very much. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you, sir, for the opportunity. We have mentioned that we have reversed the previously booked revenue of INR 71 crore. Well, if the customer has bought the corresponding cargoes from the FY 2023 backlog, would you be able to tell us the volume which it corresponds to?
... Pardon? I could not understand your question.
We have mentioned in the notes that we have reversed the INR 71 crore of the previously booked revenue.
Yeah, yeah, INR 71 crore, we have done the reversal. Yes.
So what would be the quantum of the volume that customer has brought against this? Would you be able to give us it in TBTU terms as well?
Quantum, you can just imagine it will be around, we can give you the estimated amount. The exact amount we will work out, but estimated amount will be around, 11-12 TBTU, 11-12 TBTU will be the volume.
Right. And in terms of the September quarter, is the December quarter the last quarter when buyers can bring in their cargoes for the 2023 backlog. Do we have indication from any of the-
2021 backlog.
2021 backlog, yeah. Do we have indications from customers what volumes they are planning to bring during the next quarter? Or are there customers who have completed their contracted quota and have a flexibility to bring?
Right now, we'll discuss you after the December quarter.
Sure, sir. And in terms of the Kochi volume, are we seeing any uptick in the volume because of basically the start of consumption of the MRPL? Is that sustainable?
See, I have told you that Kochi terminal utilization will enhance after this pipeline is connected to national gas grid. But at present, it is operating almost at the same level, around 22% capacity.
Thank you. Thank you.
Right.
Thank you very much. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you, and good evening, and wish you all a very happy Diwali. So, in terms of the balance sheet, if you look at the, you know, provisions and, receivables, and, the, net provisions. So, as of September, you have made provisions worth INR 599 crores, right? So to that extent-
Till date.
Yeah. Yeah. So, what is the likelihood of this... how much of this would you think you'll be able to write back, say, and when would that happen? And secondly, when you look at the receivables net of provisions, you know, when do you think you'll be able to, you know, make progress in, you know, receiving these outstandings of, you know, 17, 15 crores, which is the net receivable on take-or-pay?
Yeah, I have told you that, as also mentioned in our disclosures, that we have entered into an arrangement with the off-takers, whereby those who have defaulted in 2021 and 2022. For those who have defaulted for the volume of 2021, they can bring volume till December 2024, and for those who have defaulted in 2022, they can bring their volume till December 2025. So let this period happen. Thereafter, we will work it out. But also, one thing I can say that we have taken the bank guarantees from these off-takers, and it is ensured that the recovery is made. Either they make the payment or we shall encash the bank guarantee.
Okay. So basically, this is just a bookkeeping entry. There is no, you know, need to worry about either the receivables not being, you know, actually received in cash or, these provisions increasing further in terms of any write-off. So that possibly is something you can confirm.
This is made just as a prudent accounting practice.
Yeah.
It's not that, it has any impact on the recovery part.
Sure, sure.
There is no need to make a provision also.
Yeah.
Because we have got the bank guarantee, there is an assurance that payment will come.
Okay.
So this is how we perceive it.
Yeah.
Perhaps from that point of view, it doesn't look like that it will not be recovered.
Just the next couple of questions. One is, if you look at the recent statement made by the head of Total in the Singapore conference, while he agrees that there is a lot of liquefaction capacity, he was cautioning that there could be some delays in some of the new LNG liquefaction projects expected in CY 2025. If you have any thoughts on that, do you think that is something which you are concerned about, while the 2026, 2027 numbers look very favorable for importers like India? The next thought is on the recent government decision to allocate additional gas to ONGC Petro additions from the plan to increase production from the nomination blocks.
So to what extent would that additional gas, being supplied from the nomination block to OPaL will reduce the potential sale of ethane you are planning to do with OPaL? If you can just address these two thoughts, be great.
I think Vivek is there. He will answer your question, but I would like to point it out that it is not related to our area of work. In fact, whatever decision has been taken by the government of a domestic allocation to OPaL is a government decision and whether they will take ethane from us or not, this is again, we have to discuss with them. We have a discussion with them, but it has nothing to do with ethane import, which we are creating now. Those discussion will continue, but further, my answer will be fortified by Mr. Vivek Mittal. Vivek Mittal, right, Vivek?
I think two questions you had . One is the Total y our statement that some of the liquefaction projects could get delayed. Yeah.
You may be aware that almost 200 million capacity, which is being added across U.S., Mozambique, and Qatar mainly. So slight delay of few projects will not make much of a difference as far as total availability is concerned. In fact, Petronet has signed a volume from Qatar, so we are not expecting any delay in Qatar. U.S. projects might get delayed, but, Qatar is very clear they are on track. Secondly, ethane, as you mentioned, so as you will be aware, firstly, our contract with, ONGC is only for supply till, April 2028, when our existing Qatar deal ends. So the government can allocate gas only if they extract from that Qatar. So post 2028, there is no commitment from Petronet's side, and of course, we are in discussion with ONGC for supplying ethane by importing directly at our Dahej terminal. So those discussions are ongoing.
No, no, the reason why I raised that is since you are banking on OPaL as one of the customers for ethane tolling business. So, wouldn't that, to some extent, you know, reduce the potential need for OPaL to buy ethane from you? That was a broad thought I had.
No, no, no. They are extracting ethane from rich LNG, which we are getting from Qatar. In lieu of that, government has given domestic gas. Sure. Towards the swap quantity. It's not that ethane is being supplied by ONGC. It is only the extraction which is taking place from rich LNG supplied from Dahej terminal is being imported by Petronet.
So once that contract ends in April 2028 , there is no commitment from Petronet's side to ONGC, and accordingly, they cannot extract, so the question of swap gas does not arise post 2028.
So you are saying that even if there is additional nomination gas on the nomination block, we can still, you know, expect to do some business with OPaL. Is that the way to understand that?
See, yes, of course, OPaL will need ethane, but still there will be no commitment to get rich LNG from post- 2028. So we cannot guarantee supply of rich feed to ONGC, so consequently, the only option left is to import ethane.
Okay, fair enough. Thanks a lot, and have a good day.
Thank you very much. The next question is from the line of Sabri Hazarika from Emkay Global. Please go ahead.
Yeah, good evening, sir. So, just a small question regarding this Gorgon volumes, the second phase. So that will be, like, 1.2 million ton Kochi terminal that will start coming from 2026, 2027, right?
Right.
And that will be, I think, 0.6 will come in FY 2026, and that will ramp up to 1.2 by FY 2027.
Right. Correct.
Okay, then this has been. I mean, I think you have adjusted the Kochi tariff, I think, three years back. So this was because of this adjustment only, right?
This was done as a part of this, settlement that they'll bring the gas.
Ah.
We have renegotiated that Kochi tariff.
In case the demand is not there in Kochi, then it can be bought in this current arrangement in Dahej itself, and we charge Kochi tariff.
Demand will be there, I'm telling you, na. It will be connected to gas grid.
Yeah.
Actually, the demand will be there. We are always optimistic. We never talk pessimistic. So it is. It will be there. So I have told you, swapping will be done. We will not do it. It will be done by IOCL GAIL, because even they will have to supply the CGD entities. They can swap the gas from our terminal. So either way, this will be utilized, whether we utilize or it is, other off-takers to utilize it, because it will be falling in Zone 1 tariff for the southern Indian cities.
Right. And, I mean, there will be no further downward adjustment in Kochi tariffs from these volumes, right? Or it could there be?
Right now, it is not anticipated.
Okay, sir. And, just small question regarding your CapEx. You didn't tell us the number, but your cash flow statement is showing around INR 650-660 crore for each one. So that is the broader number, right?
That is, you can take it. Yes, that is okay.
It's under 7 million, okay. Okay, sir. Thank you so much, and all the best.
Thank you.
Thank you very much. The next question is from the line of Vishnu Kumar from Avendus Spark. Please go ahead.
Thanks for your time, sir. Many questions you have answered, but we wanted to understand that next year, what is your internal estimate of volumes that we can expect from the new terminal, the new addition, the third jetty that we are adding?
Next year estimate is 22.5 MTPA from Dahej and five MTPA from Kochi. So we have the capacity, we can utilize it, but at least Dahej, we are hopeful that we'll be able to utilize maximum capacity, because it takes time to utilize, but hopefully, we'll be trying to utilize maximum possible of the expanded capacity. But it will be around 22.5 . You can say more than 20 million tons.
Even, irrespective of, I mean, however we sign the contract, spot, medium-term, whatever we bring in, you're still expecting that next year you can do 100% utilization there?
Because recently I told you that we have capacity of 17.5 million tons, and we are operating at almost last quarter, we have operated around 20 million tons. Although we have contract for 15.75 million tons for Regas capacity and other trading volumes. So you can see that we are able to utilize more than what we have on long-term basis, capacity booking. So it's not a challenge, because once the prices are moderate, then more volumes are coming in terms of spot and short-term energy as well.
Got it, sir.
There is no challenge here. We hope that we will be able to utilize the entire capacity which is being expanded.
Understood. Sir, when the Kochi, let's say, the pipeline come through, and if we hit closer to about 4.5, 5 million ton capacity utilization, at that time, will our average tariff drop from where we are today?
Average?
The realization that we are getting in Kochi, if our utilizations in Kochi improves post the pipeline, will our tariff at Kochi further go down?
This we cannot discuss. Right now, Kochi tariff is fixed. There is no reason to revise it, and we are not thinking about that. So whatever be the capacity utilization, it will continue like this only.
Got it, sir. And one final question for me, we-
Has not been considered so far. So I cannot predict what will happen, nobody knows, but as of now, there is no discussion on this issue.
Because a couple of years ago, I remember, sir, we were discussing that because utilization was low, we had-
We had discussed. You are right, and we had also revised this downward, and thereafter it has gone up to level of 89.33 now, almost.
Okay.
It's there.
Okay. The next question is, sir, we have seen some new contracts by Shell getting signed even at 11% on oil. And also, we also understand, I mean, as you're also highlighting, a lot of new liquefaction terminals are coming. So we have signed at about 20% with Qatar. So do you see a scenario where a couple of years down the line, where we might get further contracts, new contracts, getting signed at much lower than what we have signed with Qatar? And how will that impact our current... As you said, our Qatar contract is getting I mean, we are still in talks with our off-takers to sign it. Here, do you see a chance that this is a possibility?
How do we mitigate in the contract itself, that this kind of problem will not arise for us, where we're not able to place the volumes?
Price part, we cannot discuss because it's a confidential matter. But whosoever is signing the contract at whatever rate be, but, we cannot discuss how much we have done and how much others are doing. And, other things are, that who has signed 11%? I don't know, but, whatever we have signed is a good contract, and it's a back-to-back, and there is no reason for revision in that contract in future also, because it's a fine price, it's a good price, and, what others are doing, that is not going to impact us. But, we can assure you that, there is no challenge to P&L as such. It has been already tied up back-to-back, so we don't foresee any reason to revision of prices in future also, in energy prices of Qatar.
Okay, got it, sir. And, the receivables for short volumes for calendar year 2021, if we understand, was about INR 420 crore. Just to, just for bookkeeping, how much was provided out of this INR 420 crore, sir?
You are talking, usage charges?
Yes, sir.
It was around four hundred and some INR 20 crores, whatever it may be. But now it has come down slightly because some of the capacities have been got. So it has come down to almost three ninety-three crores, three seventy-eight crores, rather.
So my question was whether we have already provided this in P&L fully, or was there something that was pending, I mean, in fourth quarter? Trying to understand that, whether we'll have a positive or a negative impact on the P&L, that's all. If if the 70 become 100 or 150.
What I'm saying, that whosoever will bring the volume in excess of the annual commitment, annual ADP, they will. That volume to that extent, volume, the usage charges will be reversed. Because that part of volume has been to their sales revenue. So there is no challenge in that. But only thing, we will be able to do this only after fourth quarter, which is after December, who was able to pay it and who was not able to pay it. Then we will see what action to be taken, and as you know, we have the bank guarantees for the off-takers. And this is the arrangement they have agreed, so we hope that it will be recovered. For 2021, it should be recovered by December 2024.
So my question actually was this INR 420 crore, which you just mentioned. It has already been provided fully in the P&L to date. That was the only question I asked.
It has-
Any, any recovery is recovery for us.
Provided. It could have been provided by this year end, but there is no need, because by that time, almost settlements will happen. It's almost 75% we have provided.
75% of this is provided?
Yes. 75% we have provided, and balance is to be provided, but perhaps it will not be required because by that time, settlements is to be done by December.
Wonderful, sir. Thank you.
Thank you very much. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for the closing comments. Thank you, and over to you.
Thank you very much. I first of all wish all of you happy Diwali, and as you know that we have been doing our best to perform in terms of physical performance of Dahej and Kochi, and this endeavor will continue even in future, and as I told you, that company is doing very well, and after new upcoming projects being in place, perhaps the bottom line will further increase, and the level of company will be very high, so I thank all of you for reposing confidence and faith in our company, and we want to assure all the investors that we'll continue to endeavor to increase the bottom line of the company, and any decision taken will be on a commercial basis. It will not be any outside pressure or any influence, so this is how we are proceeding.
Thank you very much.
On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.