Good morning, everyone, and, welcome to Petronet LNG's Q3 FY25 Earnings Conference Call, hosted by Macquarie. For the discussion today, we have with us the management team, comprising Mr. Vinod Kumar Mishra, Director, 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 question and answer session. Over to you, sir.
Thank you. Very good morning to all of you. 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. If you look at the throughput in the 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 the previous quarter and 232 TBTU in the corresponding quarter.
If you look at the nine months result, it has been highest ever, and the total throughput in Dahej has been 686 TBTU, as against 646 TBTU in the previous nine months, previous year's nine months. And overall throughput has been 729 TBTU, as against 685 TBTU in the corresponding nine months of the previous years. And if you look at the financial result this time, it has been INR 1,169 crore as PBT this time, as against INR 1,140 crore of PBT during this last corresponding quarter, and INR 1,597 crore in the corresponding quarter.
PAT has been INR 867 crore in the current quarter, as against INR 848 crore in the previous quarter, and INR 1,191 crore in the previous quarter. Sorry, it has been INR 867 crore in the current quarter, as against previous quarter of INR 848 crore and INR 1,191 crore of the corresponding quarter. If you look at overall nine months result, the PBT has been INR 3,829 crore, as against INR 3,761 crore in the previous year's nine months. PAT has been this time INR 2,856 crore as against that of INR 2,799 crore in the previous year, nine months.
So this is the financial result, and as you know, that throughput has been less, but 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 question.
Thank you very much, sir. We'll now begin the question and answer session. I request all participants to use the raise hand feature to ask questions, and in order to ensure a wider participation, I would request everyone to please limit their question count to one, and you can always join back in the queue for further questions if time permits. So, we'll now take the questions. We'll take the first question from Puneet Gulati. Puneet, I request you to please go ahead and ask your question. Puneet, you seem to be on mute. Can you unmute and ask your question, please?
Yes. Can you hear me?
Yes.
Okay, great. Yeah, so thank you so much. 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 2023, 2024. So what's driving this bit of slowness on the long-term side for Dahej? Any thoughts, sir?
Okay. So if you look at the volume in Dahej, this will be. It has been lower as compared to, you're saying that it's compared to corresponding quarter, slower.
Yeah. I mean, just as a trend also, last three quarters have been 96-97 TBTU. So previous year was, you know, 100-107 TBTUs, and even,
Yeah.
FY 23 was 100+.
I think volume-wise, if you look at long-term, it's the scheduling we are doing-
Absolutely.
As per ADP, we are getting, because long-term volume slightly it may be here and there, but normally it remains same, because it's a scheduled arrival of the cargos.
Yeah.
I don't foresee any fall in that. But of course, the spot and the other cargos, which are coming, service cargos-
Yeah.
They are affected by frequent this pricing, prices being higher or lower. So that will be there, but otherwise, long-term cargoes may be slightly lesser, but it doesn't matter, because it's, 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, you know, UOP dues. Any progress there? Then we noticed that there is another one for CY 2027 as well as INR 170-odd crore. Any progress on what the off-takers are now willing to pay? You had a bank guarantee, can you enforce that? Any further thoughts there?
Yeah, that bank guarantee is there, and in fact, we have already informed all the off-takers, and they will reply by 31st March.
Okay.
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 thirty-first March.
Okay.
It's only a period of hardly two months that we have to wait.
Okay.
And that's, they will pay use or pay charges for 21 at least.
Understood. That's helpful. And lastly, if you can share the, you know, the revenue for services part of the business.
For services, I think it's INR 680 crore.
Sorry, how much?
Yes, charges.
600 ?
80 crore .
Okay. Okay, great. That's all from my side. Thank you so much.
Thank you.
Thank you. We'll take the next question from Amit Murarka. Amit, request you to unmute your line and please go ahead.
Yeah, hi, good morning. So first question is on the Dahej 5 million ton expansion. So it's now just around the corner?
Amit, this is correct.
Like, uh?
Amit.
I'm just thinking that if for?
Amit, we can't hear you properly.
Kind of.
Amit, you are not audible. Amit?
Hello? Is it, is it better? Is it better now?
Yes, it's better now.
But before that, there is a clarification. There is a clarification. This regas revenue has been INR 840 crore, not INR 680 crore, as I mentioned earlier. So just a small correction we just made. Amit, now you may continue. Amit, now you can continue.
Yeah, yeah. So I was asking about the Dahej terminal. You have, you're just around the corner on the 5 million ton 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 ton, and how much of this is under firm off-take agreements? Just could you provide some clarity on that?
Yes, in fact, if you look at the capacity utilization, it has been 93% this time. But 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 cargos because of the constraint in capacity. So utilization will be there, just wait for some time, because this capacity will be in place, maybe, by June, I think it should be in place. But 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 off-takers to book more capacity in our terminals.
But it may not be 100% of 5 million tons, but it could be maybe 40%, 50% also. That will be good enough. But we will highly have more capacity to regas more spot volumes coming in future, because in future, the growth is already, already there. More terminals are also coming, but at the same time, more long-term contracts have been signed. So I think there is a chance that more cargos will come to our Dahej terminal in future. And we are hoping for capacity booking also to the extent of 30%, 40%, 50%.
Would you be able to at least give a ballpark guidance or how we can think of a ramp-up on this 5 million ton, like between, let's say, year one, year two, FY 2026, FY 2027?
Cannot be told exactly how much will be the ramp-up. We are ready from the day one, that it will be possible.
Yeah, ballpark is also okay. Like, are you thinking about 30%-40% for FY 2026 and maybe 60%-70% for 2027?
Like 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 the prices softening. There was a lot of utilization. We were at 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 latter half of this year. So if prices soften, then utilization level, of course, increase, and because the competitiveness of LNG increases, these are just alternate fuels. So let's hope that the prices soften, which will help us in utilization and increasing share of gas in the India's energy 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 if at 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 2025 and 2026?
Right now, we see this year it has been almost INR 340 crore. We expect at least 10%-15% of the CapEx, maybe into INR 3,000 crore-INR 3,500 crore. This is the expectation for the next year, actually at 2025, 2026.
Sure, sure. And just if I can ask one last question. You've also announced some contracting on the polyol capacity under the 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?
We're talking about this poly-Diphenol is.
Diphenol is top priority.
Yeah, yeah. I think we cannot disclose, because this is something which is between the two parties. But this is a price which will ensure us that we are always having some margin by selling the offtake. There is no chance that we will be losing anything on this.
It is linked to international prices.
Yeah, international prices linked.
Linked to international prices, do you think?
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, uh.
Not exactly the same as you are saying, but as I said, this is more dependent on Southeast Asia as price. So it's more like that.
Sure. I'll come back in the queue. Thank you.
Thank you. We'll take the next question from Maulik Patel. Maulik, please go ahead.
Yeah. Thanks for the opportunity. In the last two years, GAIL and IOC and GSPC has signed a few of the long-term contract, largely starting from 2026. I think one of the contract of GAIL has also started in, in this month also. Has any of this volume is going to come to, to Dahej or Kochi? Has any of this discussion happened with, with this, with, GAIL, IOC or GSPC on that?
Yeah, of course, volume will come to us also, because it's not that whatever volume they have signed with the other tenders, it's not possible to utilize entire volume over there. So definitely our tender will be utilized. As I earlier said, our capacity is going to expand by 5 million tons in next four-five months. So then it will be utilized for that purpose. Of course, as I said, more long-term contracts mean more volume to Dahej. You 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.
Whatever volume is coming long-term after 2026, definitely it will come. Majority should come to us. You know, at least 50% of that should come to us.
So you mean that approximately there's a 4.5 million tons of long-term volume has been signed by these three players? You expect approximately 2 million tons to come to the Dahej additional volume?
Maybe, but I cannot give the figure exactly. We hope like that. I have said that we are trying to get the capacity booked in off-takers so that they can bring more volume here. Maybe that 40%, 50% of the volume which has been pushed will come to us.
So they need to book the capacity to Dahej, right? Additional capacity, which they have not done, 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, that you know.
Yeah, and just one bookkeeping question. What's the trading or inventory gain this quarter? I probably, I missed if you have mentioned it earlier.
Trading gain is INR 26 crore and inventory gain is INR 83 crore.
This inventory gain is related to that, Dahej internal consumption, which is 0.7%, which is, which is being taken by, and which is 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 large because of the movement in price.
Okay, got it. Thank you.
Thank you. We will take the next question from Shubham Shukla. Shubham, please go ahead. Shubham, request you to please unmute your line and go ahead. We can't hear you, Shubham. We'll take the next question for now. We'll take the next question from Shivam Sharma. Shivam, please go ahead with your question.
Hello, am I audible?
Yes, Shivam. Please go ahead.
Yeah. So I have two questions. Essentially, first question is understanding the tax structure, which is valid for Petronet. Once it gets, well, once it imports the LNG cargoes?
Mm-hmm.
Basic Customs Duty and SWS, do you also pay VAT? 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, when it's, once the natural gas comes under GST. And the other question stands at that, we have seen about 25% growth YoY 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 rational and it will give a lot of comfort to the consumers. So I think it is going on, discussion is going on, and maybe government is keen to include it. Ministry of 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 off-takers while selling the RLNG or LNG.
Locally, they are taking gas to other states also, these off-takers, and there they are again charging VAT while selling it to their consumers, their customers. So this is how tax structure is. Also, as I said, that VAT 15% is a big problem in Gujarat because it, in fact, is levied, and again, the state tax, wherever gas is sold again by our off-takers, they are again paying VAT of that state. So it's a cascading effect of the VAT which is there, and I think that 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 the tax structure.
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 credit.
Kerala, where we have Kochi terminal, if 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 is not an issue, but the gas coming from Gujarat has a VAT of 15%, which is very high.
This is something which needs to be paid by the off-takers, right?
Yes.
The VAT does not get levied when you import the LNG from?
Mm.
Companies like QatarGas?
Mm.
When you sell it to GAIL, when you sell it to off-takers, then, it's?
Then only it is there. Absolutely.
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 the input credit?
In case of gas consumed in Gujarat, they may get some input tax credit, but for the gas taken away from the Gujarat, means which is not used in Gujarat, they won't get any input tax credit.
Understood, sir. Understood, sir. And, and the second question was, again, the, the impact which you see, the 25% growth of LNG imports was there YoY, but yet we see a decline in the utilization for, your terminal. So why do you think that, you know, the, the utilization has not ramped up according to the imports volume?
This is not. Shivam, this is not correct.
Mm.
Because if looking at quarter-on-quarter basis, it's maybe lower, but you will look at the nine-month period.
Understood.
We have 686 TBTU brought in the hedge, as against 646 TBTU in the nine 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 nine months period from April to December, you'll find that we have brought more than last year. This is the highest ever throughput of 729, including both the terminal, in this quarter, after taking all the three quarters, April to December. So don't compare quarter-on-quarter basis, because we give the flexibility also to the off-takers, that they can bring within the calendar year, till December. So they bring as per their convenience.
But you look at the nine-month period, you will find that we have 666 TBTU brought in the hedge, as against 646 TBTU brought in last year, nine months. And Kochi also, it has been 43 TBTU, nine months, as against 39 TBTU in the last year, nine months. So this is the difference. So we have a growth trajectory, you see.
Is it more or less in line with the growth of India's LNG imports?
In line with India's LNG imports. I think there is no concern on that account. Don't compare each quarter as a standalone.
Mm-hmm.
Look at the overall in last three quarters also.
Understood, sir. Thank you.
Thank you. We'll take the next question from Pratyush Kamal. Pratyush, please go ahead.
Thanks a lot for giving this opportunity, sir. Hello?
Yes, Pratyush, we can hear you. Please, go ahead.
We are audible.
Yeah. Yeah, so my question stands out that, I wanted to understand, the gain which you get on the marketing, 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 this, just on the spot cargoes or also on the cargoes, which is, back-to-back LNG, 7.5 MTPA contract or the, you know, 1.4 MTPA contract with ExxonMobil. So how does it work? Other than the regasification charges, the service charges, how do you make the other margin, the trading margins?
Sir, long-term contracts, as you know, that these are back-to-back contracts, and there is no marketing margin charge on that. It's only the volume which we are selling. In fact, to, on the short, 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 of long-term contract. It's only the spot, we sell or short-term gas we sell, that we charge marketing margin, but long-term contracts are back-to-back, there is no marketing margin.
Understood. What is the kind of provisioning reversal which we can see this quarter and a few quarters beyond this, for FY 21 and 22? What is the update on the FY 23 UOP charges?
If you look at 2021 provisioning, if you look at we have made total provision till date of INR 315 crore, out of the total INR 360 crore. 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 crore. So if we get the money against the user pay charges, this will be adding to our bottom line. And you are saying about this, this year's user pay charges?
Yes.
That is INR 117 crore only. And the what is good part, that the defaulters have considerably reduced this time. Earlier, here you must have seen four, five off-takers all had defaulted, but this time, only one customer has defaulted, that is BPCL, INR 117 crore. Otherwise, all have complied with the contractual obligation this time. There is no default on any accounts. So whatever concession we are making is just to discipline them, so that in future there is no default. Maybe last two years, three years, we have given them time to build the volume and get it waived. But at the same time, we have to see that this contract is a long-term contract for regasification, and we have to, in fact, think of what kind of discipline in the contract.
If they fall in line with our this 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 capacity, and they have complied with their obligations as per the contract. Only one customer has defaulted. So hopefully next year, that will also be not there.
No, but FY 2021, 2022, you do have the bank guarantee. But what about the FY 2023, 2024 defaults, if any? FY 2023, we know 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. Yes. In future, this 2023 also, we have got the approval of the board yesterday.
Okay.
We are going to give the same kind of mechanism to bring the volume in next three years, maybe, this by December 2026, for 2023 also. So this kind of dispensation we have agreed, and, perhaps they will provide us bank guarantee and guarantee bond, and thereafter, this, particular, mechanism will be available to them. So similar to 2021, 2022, 2023 will also be there. So this is the mechanism for recovering INR 610 crore. As I said, this year it is very marginal, INR 117 crore. Hopefully next year there will not be any default.
Understood, sir. And how does this provisioning work in the accounts? You make the provisions for the, 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?
Yeah, it's a waiver. We are waiving off whatever use or pay charges are there. We are bringing additional volumes over and above the annual contractual commitment with them made.
Okay.
So, bringing the default quantity over and above this annual commitment, then we adjust to that extent the user pay charges for that year, maybe 21% or 22%. So this is ideas.
Understood. Thank you, sir.
Thank you. We'll take the next question from Sabari Hazarika. Sabari, request you to please go ahead with your question.
Yeah, hi. Am I audible?
Yes.
Yeah. So, few questions. Firstly, when you. Regarding your CapEx, you said, you'll be doing INR 1,500 crore this year, right? And next year will be INR 3,500 crore. Is that right?
This year, maybe around INR 1,500 crore, because we have already spent INR 940 crore or INR 976 crore this year, in nine months.
970 crore.
Maybe, because you can take 300 crore-400 crore more.
45 crore.
At least 1400 crore-1500 crore, very much.
How much will be on petrochemicals out of this INR 976 crore?
INR 340 crore.
INR 340 crore will be?
Maybe, it may further go, maybe 500 crore, it may happen after month, up to a month.
Okay, fair enough. And secondly, you gave this number, INR 840 crore of regas service income. So this includes the take or pay also, right? The INR 117 crore is also included here. Is that right?
Yes, yes.
Okay. So pure service income will be basically INR 840 crore INR -107, if we are to compare it with the volumes.
Yes. Yes, yes, you can.
Okay. And thirdly, this once, I mean, you have mentioned that INR 315 crore of provisions you have made. So as soon as the bank guarantee gets encashed, in the books of accounts also, we will see INR 315 crore basically as a provision reversal in other expenditure for that particular quarter. So that, that is how the earnings will show, right?
Yes, yes, yes.
Okay. Okay, fair enough. Lastly, some bookkeeping questions, I think, in carbon volumes in Dahej and in this and in these numbers, actually.
Yeah. Carbon volumes, YTD is 13 TBTU. You can derive the quarterly number.
Right. And, in these numbers?
Is INR 160 crore positive at gross margin level.
This is for quarter, right? Yeah, yeah. Okay.
And INR 53 crore of Forex loss, INR 7 crore positive at the other expenses level, then depreciation INR 82 crore and finance cost INR 64 crore.
Okay. So, okay, got it. So INR 32 crore. And this other expense, does it have anything further other than Forex loss, which made me INR 500?
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.
Okay. Okay, sir. Thank you so much, and all the best.
We will take the next question from Mayank Maheshwari. Mayank, please go ahead.
Thank you for the call, sir. So first, 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 2026 for you? And the second question was related to, Dahej. You talked about 40%-50% utilization rate. So in your timeframe over the next three-four years, how do you see, the capacity mix between, spot versus contracted for Dahej eventually panning out?
First question is regarding petrochemical. So, as you know that we are already going in there, 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 large and big 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. 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-INR 3,500 crore of CapEx next year for petrochemical projects. And, as you know that we are also tying up with the lenders, and we are in the process already.
We have invited 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 will be 70/30 debt equity. So probably this will be finalized within the next three-four months, and thereafter, we shall be ready for any kind of CapEx. But initially, as you know, the CapEx will be hardly 15%-20% the first year, 25%-26%, and then it may ramp up to 30%, and 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-INR 3,500 crore for this CapEx project.
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, then we shall be going to get approvals, and thereafter, we shall be finding the contractors to start this work.
Is there an answer 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 been made for that?
We are in the process, and, very shortly you will come to know that, yeah, what we are doing. We are vigorously following up with the clients 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 written agreement with the off-takers. So 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, maybe. So 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, where we are getting rich gas and extracting C2, C3, and giving it to ONGC, and ONGC is 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, they cannot extract C2, C3. 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, has already started for third jetty, which can import three liquid hydrocarbons: ethane, propane, as well as LNG. So I think, as soon as the agreement is signed between in-person 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 on short-term or midterm or maybe long-term basis. This we have to see which is more beneficial.
Got it, sir. So 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're 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 ready 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 they agree to sign an agreement with us to supply ethane as well as handling of the ethane, then certainly we will also order the ethane carrier. And that will be possible only after there's 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 so the last question on the.
Sorry to interrupt you. Request you to please join back in the queue.
Sure.
In the interest of time. Thank you. We'll take the next question from Ambar Taneja. Ambar, please go ahead.
Hi, can you hear me?
Yes, yes, we can.
Yeah, sir, please talk a little bit about two things. One is: what kind of pricing environment do you see for short-term cargos, let's say, in the next six 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 into 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.
As far as the spot price is concerned, it is likely to remain in the range of $12-$14 in the next six 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-$8. Because the capacities, which is coming more than 200 million tons of capacities are coming after 2026, 2027, I hope that there will be glut of LNG in the market. And when there will be glut, 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 you, why did we not either buy some stakes in upstream or sign some new term contracts? I mean, that, 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, LNG plants are, liquefaction plants are not sustainable. You know, 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 terminal also, but $6, $7, $8 is still a viable price for the LNG liquefaction.
Okay.
Compare that situation, which is very abnormal. But going forward-
Mm.
A lot of PI, PIDs have been made. So I think these plants will be coming up in the next four-five years. You will see the glut in the sense that according to the demand, I'm not saying this glut will always remain glut. Because once there is availability of more gas in the market, certainly more consumers will be there, and as you know, the energy growth is already there, consumption will already be there. So,
Mm.
going up, energy consumption will be going up, so it will also match with the supplies. But only thing, pricing will be moderate. I am worried about pricing only. Indian market is price-sensitive, and whenever the prices are lower, consumption suddenly rises. We have seen our, our case also, our terminal utilization maximum capacity, where the prices are moderate. Had it been around $10, $9, our terminal would have been utilized more than 100%.
Mm.
Pricing impact, which is there on our utilization, it's through all the, for the Indian consumers, that they tend to utilize alternate fuels if the price is off LNGs. As I said, $12-$14 is still sustainable price, but it should be in the range of $7-$8, then certainly the consumption of LNG will be much, much more in India, and LNG 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 future. And right now, it is likely the next one-two years you see, it may range from $10-$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 Ind AS 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.
Okay, thank you.
Thank you. We'll take the next question from S. Rishabh Singh. Rishabh, please go ahead. Rishabh, request you to please go ahead with your question. Can't hear you, Rishabh. We'll take the next question from Somaya V. Somaya, please go ahead with your question.
Hello?
Yes, please go ahead.
Yeah, thanks. Thanks for the opportunity, sir. 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 timeline that we are looking for, for this 2028 long-term contract tariffs.
The hike is there in Dahej, and we have taken from first of January, we have hiked our price of regasification by 5%.
What are the current tariffs, both in Dahej and in Kochi?
Tariffs, normally we are not disclosing because we are doing. But only question which has been asked, that there is a hike of 5% from this year.
Okay, sir. Got it.
In the market, you can add it, right? We cannot disclose it.
Got it, sir. Also, this 2028 long-term supply frame of-
The long-term contract, we are in fact in discussion. Shortly after, maybe some time, maybe may take, six months or maybe one year time, and I think still there is the 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, when we first signed with RasGas, and similar, offtake arrangement will be there. Only thing, we have to finalize certain terms of the contract. Will be very shortly, maybe six to one, six months to one year, it will be finalized, and then we shall sign the contract, and it will go ahead.
Got it, sir. So second question is on Kochi Terminal. So how do we see utilization? I mean, the Kochi-Mangalore pipeline progress, how do we see it for next couple of years? So from 25%, do we see it going to 40%-45% in the next couple of years?
Yes, yes, sir. As far as the Kochi terminal is concerned, I have 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 complete. So 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 regime already there. So in Zone 1, the tariff is around INR 40. So if any customer, like GAIL, has any customer in this Kochi region or in the near, Kerala or near Karnataka, they will prefer to take volume from us by swapping this gas, and then supply to the customer, because then customer will be benefited as they will be charged the Zone 1 tariff of INR 40 crore. Because if they bring it from Dabhol and supply to a customer in Karnataka or in Kerala, then the Zone 3 tariff will be there, which is around INR 140, INR 40. So it will be in the interest of the consumer, that they should get the gas from the nearest source available.
It's not only me that I will supply the gas. It is also possible that any other off-taker, whether it be, ONGC 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, so that they can give the competitive price of the gas to the consumers. Then it will be utilized, I think, 40%-50%, which is connected to national gas grid.
So sir, one clarification on the petchem. You, you mentioned INR 3,500 crore of CapEx per annum. So what would be the non-petchem spend in FY 2025-26? That is one. I mean, the timeline for the petchem startup, if you can just confirm on that. Thank you.
Petchem, as you know, that this time, 2024-2025, we are likely to spend INR 400 crore. We have already spent around INR 340 crore. Next year, we shall be. We are planning to spend around INR 3,000-INR 3,500 crore of CapEx for petrochemical products. And as you said, when it is likely to come up, the. Our scheduled date is November 2027. So that is the time when it should be commissioned, and maybe by 2028, it should be ready for. So I think, this is the timelines for completion of petchem project.
Non-petchem CapEx?
Non-petrochem CapEx is around till nine months, INR 636 crore.
I'm looking for FY 25, 26.
FY 2024, 2025, 2026 will be. I think, just a minute. I need to. Other than petchem, it should be around INR 1,000 crore maximum. So major project which is going on is third jetty, for which contracts have been awarded, and total contract value is around INR 1,904 crore. That is the major CapEx item going on. Part of that CapEx is only petchem. As Gopalpur will start, as and when the sewers are there. So I think this is a major, I think INR 1,000 crore more, maybe INR 4,000 crore total CapEx may be there. INR 3,000 crore-INR 4,500 crore, including petchem.
Got you. Thank you.
Thank you. We'll take the next question from Nirmal Gore. Nirmal, please go ahead with your question.
Hello. Thank you for the opportunity. My question is a follow-up to the global LNG gas capacity that you were talking about. So my question is just a clarification. When do you see this gas glut happening? Is it second half of 2026 or 2027?
Nirmal, just repeat your question. Your voice is not audible.
Hello. Am I audible now?
Now it's audible. Please continue.
Yeah, my question is a follow-up to a previous question that you answered. Wanted to understand, when do you see the gas glut happening due to increased global LNG capacity? Is it 2026, second half, or 2027 first?
It should be 2027 onward, I think, because most of the plants are under construction. In next two to three years, they should be ready for production. So you take it 2027 onward, because even RasGas, QatarEnergy projects are also likely to be done by 2027. So after that, only this. And ramp-up also takes some time. So maybe 2027, 2028, maybe the year, then there will be likely a glut, but real glut will be 2035. 2030, it will be there. 150 million-200 million tons of capacities will be there by 2030. So that means that 150 million-200 million tons capacity is in addition to whatever is there right now.
So I think that is the part I was talking about, as most of the projects are under construction, and after assuming the office by Mr. Donald Trump, it is likely that drill, baby, drill kind of concept?
Uh.
As a production of gas and oil in the U.S., that will further be promoting the production of gas in the national market.
This $7-$8 price that you were mentioning about, we should see that in 2030?
We are expecting only, I'm not saying it will be $7-$8 in two-three years, but maybe after 2027-2028, it should be there. Because this QatarEnergy capacity itself will be ramping up to almost 143 MMTPA from 77 MMTPA. They are doubling their capacity almost. So that means that there will be enough gas available in the market. So I'm talking about thing only.
Yeah.
The U.S. capacities are coming up in a big way. That's why I'm saying 150-200 MMTPA will be there.
Understood, sir. Thank you for your-
Thank you. In the interest of time, we'll take the last question from Nitin Tiwari. Nitin, please go ahead with your question.
Hello. Hi. Thanks for the opportunity. I hope I'm audible. Just like, you know, some clarification I was seeking. So in terms of use or pay, right, given the provisioning we have made and the kind of user pay charges that stand as of date, so now we are clear that, like, you know, no more cargoes can be brought in to make up for those charges. I mean, the timeline for that was December last year. That is current understanding is correct?
Yes, yes, it is correct. For 2021 calendar year, this is over now. Whatever cargoes is.
So?
They have brought, there is no time left now.
Right. So whatever the charges are there for 2022 and 2023, they are still open for cargoes to be brought in against them. That's, that's the right understanding?
They have time till December 25 for calendar year 2026.
Right. So, sir, if you can just summarize for us in terms of what are the current user pay charges that are outstanding, what is the provision that we have made against them, which are now non-recoverable, I mean, sort of provision that we have done? And what is the recovery that we have done against the user pay charges by the cargoes which are brought in? I suppose there is a figure which is given in the results release as well, of INR 184 crore roughly. So is that the?
Yes. That is the kind of waiver we have done, INR 184 crore.
Right.
This quarter we have INR 39 crore.
Correct, sir. So just like, you know, for keeping all of us on the same page, so what are the current user pay charges which are outstanding, and what is the provisioning that we have made? And against what are we expecting, like, you know, now the cargoes can be brought in for recovery, what amount?
If you look at the total, use or pay charges, as of now, are INR 1,666 crore, and we have made a provision of INR 702 crore. Around INR 963 crore-INR 964 crore is left, which are the other than provision, net of provision.
Right.
If you look at this 2021 calendar year, I've told you clearly that there is no time left. So whatever charges are there, INR 360 crore, they are due for payment.
Mm-hmm.
They cannot.
Right.
There cannot be any waiver of the charges now. 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 crore. So this is the provision of 2022.
Okay.
There is still time left for utilization of this capacity. We can still get this benefit. We bring more cargoes this year in December 2025. And as far as calendar year 2023 is concerned, total user charges are INR 610 crore, for which we have extended similar scheme as we done for 2021, 2022. They will give the bank guarantee and indemnity bond, and then they can bring this volume till December 2026.
Understood. So, the INR 184 crore that has been recovered, it has been recovered against the INR 360 crore user pay charges of 2021, right?
Not exactly, maybe 2022 also. This is combined impact, because we are giving impact for both the years.
For some of the.
Have defaulted in 2022 only. So they have brought the cargo, so 2022 charges have been reversed. So it's a combined, 2021 and 2022, INR 180 crore.
Understood. So, basically, your net INR 963 crore, which are now outstanding, cargoes can be brought in against these, this amount only, because INR 700 crore is already provisioned for?
Yes, yes, yes. INR 700 crore has already been provided.
Right. Sir, I missed out on the inventory gain number that you mentioned for the quarter.
As said, INR 83 crore is the inventory gain, INR 26 crore is trading gain, total INR 109 crore.
Right. And, lastly, sir, if I may, so if everything remains the 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?
Utilization level, as you know that this quarter, it has been, 93%, but, we expect this to remain in the range of 95%-100%.
On the expanded capacity, that's what we are talking about? So, so I'm looking for some guidance for the throughput, right?
Throughput is already highest ever in nine months, so I think, this will continue. We are always optimistic about our throughput.
Okay. No specific guidance that you can provide in terms of, say, TBTU or million ton?
It's not, 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 nine months, it has been wonderful. As I said,
Mm-hmm.
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%-100%, is already need to be utilized.
Okay, sir. Great. Thanks for answering my question, sir. Thanks for the opportunity again.
Thank you, everyone. That was the last question. 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 first quarter. But, still, a lot we expected could not been, 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 great extent. So now 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.