Ladies and gentlemen, good day and welcome to the Petronet LNG Limited Q2 FY 2024 earnings conference call, hosted by Nirmal Bang Equities Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over the conference over to Mr. S. Ramesh from Nirmal Bang Equities. Thank you, and over to you, sir.
Good evening, and welcome to all of you. On behalf of Nirmal Bang Institutional Equities, it gives me pleasure to invite you to the Q2 FY 2024 earnings call hosted by the management of Petronet LNG Limited. Representing the company, we have Mr. Vinod Kumar Mishra, Director of Finance; Aakash Chawla, Group General Manager and President, Finance and Accounts; Narendra Kumar Sharma, Group General Manager and President, Marketing; Mr. Vivek Mittal, Chief General Manager and Vice President, Marketing; and Dilip Kumar Sastry, General Manager, Finance and Accounts. So without much ado, let me invite the management to give their opening remarks. Over to you, sir.
Good evening to you, and to welcome you to this year's quarter. I think that was very good. Please note that if you see the throughput in Dahej, it has been 210 TBtu as against 217 TBtu in the previous quarter and 182 TBtu in the corresponding quarter. Total throughput of Dahej and Kochi has been 223 TBtu in the current quarter, as compared to 220 TBtu in the corresponding previous quarter, and 192 TBtu in the corresponding quarter. So, throughput has been good, not so good, but the revenues are fine, and we have done a good job this time also.
If you see the throughput in first half of this year as compared to first half of the last year, Dahej has performed 427 TBTU as against 378 TBTU in the previous year as well. There has been a growth of around 13%. If you see the quarterly result, it has been 16% growth in throughput of this quarter as compared to corresponding quarter. Total throughput has been 453 TBTU in H1 of this year as compared to 400 TBTU in the corresponding H1 of the previous year. The profitability, if you see, has been around INR 200 crore in this quarter as compared to INR 1,062 crore in the previous quarter, and INR 994 crore in the corresponding quarter.
PAT has been INR 880 crore in this quarter as compared to seven hundred and ninety PBT, INR 790 crores in the previous quarter and INR 744 crore in the corresponding quarter. So, if you see the half-yearly result, the H1, PBT has been INR 2,164 crores as compared to INR 191 crore in the first half of last year. And, PAT has been INR 1,608 crore in this first half, as compared to first half of last year of INR 1,245 crores. So this has been the results, and if you see the growth, this is the highest ever PBT in H1 of any year in the history of Petronet LNG.
The growth of PBT and PAT in the current half has been 12%, 11%, as compared to the corresponding half of the previous year. Similarly, the PBT and PAT has grown by 11%, 12% as compared to the corresponding quarter of the previous year. PBT and PAT has grown by 2% in this quarter as compared to the previous quarter. Further, the Board of Directors has approved a dividend of interim dividend of INR 7 per share. You know, consistently, company has been paying dividend, which, 70% on the base of capital since many years. I think the result is good. Apart from that, if you see, one more development has been there in this board meeting.
Before that, I would just like to tell you that our utilization has been 93% this quarter, as compared to 96% in the previous quarter. It was only 80% in the corresponding quarter in the last year. It's good news, and perhaps this has been due to better utilization of our Dahej terminal and also the efficiency in operation. All because of that, we have been able to perform better in this quarter. One more development, which I just want to convey, is that our board has approved a petrochemical PDH/PP project. The cost of it is INR 30,685 crore, and this will be built in the next 10 months. This is the profitability from this project.
The IRR has been very nice, and you see around 20% is your project IRR, and around 30% is equity IRR. So overall, the project is good and company is going to grow in a big way, and this is a diversification which has been done. For most important thing is that we will continue to pay dividends of 100% even for this period of projects, because our generation will continue to be of that range, and projects will be basically financing mode of 70/30. So that will continue. Major highlight has been that we have got a customer who will buy 250 KTA. We have a PDH 50 plant of 750 KTA.
Out of this, 250 KTA has already been tied up to the customer in Deepak Phenolics for a period of 15 years, extendable to another five years, 20 years. The 250 KTA of propane will be sold to a customer, designated customer, and balance 500 KTA of propane will be converted to PP. Apart from that, we have also tied up with the customer for sale of 11 KTA of hydrogen at a very lucrative price. And, and that's literally influence our the risk and perhaps this can mitigate the risk which we can say we have. And, it will be the another icing on the cake as is the ethane handling system, which we are going to develop around this PDH/PP plant.
We have sales to customers and two of the customers are almost on the verge of tying up with us for selling 1 KTA of PP ethane handling. So this will be a tolling model, which will be built for the company, and there will not be any other risk in this kind of business. So these two businesses, if you see, will mitigate the risk to a great extent. And otherwise, also, the linkage between propane and polypropylene is very nice, and perhaps this will take the company to a different level in the future. Thank you very much. Now, the floor is open for questions. Please ask the question.
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 touch-tone 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 Puneet Gulati from HSBC. Please go ahead, sir.
Yeah, thank you so much, and congrats on good numbers. My first question is on the PDH/PP plant. Can you please run down, you know, your assumptions on what kind of margins, operating costs are you assuming when you indicate the 20% project IRR and 20% equity IRR?
You want me to run the margin, which has been there. See, what has happened actually, we have taken an average of last seven years, propane and propane pricing, which are basically, if you see, the pricing is done in India based on Southeast Asia, price of this propane.
Right.
We are taking those prices. Seven-year period, what we have calculated, we have removed the unusual years, 2021 , and otherwise this is all fine. This has, in fact, given us a more robust number because prices have eliminated any kind of deficiency which may have. What we have done, we have taken an average of last seven years. If you want to know exact number, although it is appropriate amount, I need to see whether we can give that. I would like to mention that it has been done by external agency, and this exercise is carried out by a cast, and they have taken the number based on the public price of propylene propane, and polypropylene. If you want to know the numbers, I will have to check with you. But I can tell you that these numbers are available in the public domain.
Yeah.
Almost there's a crack of almost, I think that is $400. If you see seven-year average for the propane versus the propylene, and around $600 for polypropylene, if you compare propane versus polypropylene. So and this is how can it I say that this is there, and IRR is calculated by SBICAPS after taking into account the current scenario in the market trend.
And more importantly, the OpEx, would there be any OpEx advantages that we have regas versus the normalized numbers? If you can give some comment there.
Yeah. This is Narendra. Actually, today the board have approved this project, and this is a message to all the Analyst and Investors that we will very shortly do another call with few more details that you are asking about the CapEx, OpEx, and the returns, etc. . We would like to touch upon this project information today on a high level basis and and go into deep detail with the Q2 results. So but then, we will come up with another call very shortly with all the details of the project. Well, in the meantime, just high level positions, which we can just discuss, that high level assumption, which you can just say, which are available with us.
These are that there's the common jetty for this project. We are going to bring another jetty, which in any way was approved by board. This is not something which is coming in the project. Secondly, many facilities like utility, they are common. One important thing has been in terms of cold energy, which we are going to utilize in the plant being. This is saving almost INR 120 crore-INR 130 crore in terms of power cost, because otherwise we need some cold energy to cool down that particular part where we are storing these materials properly. That way we are saving in terms of energy cost in a big way. Detail, we will work it out and in manner, and then we will come back to you.
But I can say because of synergy with regasification terminal, major OpEx has been very less as compared to any greenfield project, where there is high CapEx and OpEx as compared to our project.
Right. Well, thank you so much, and we look forward to the detailed call. But just, for the sake of it, initially the plan was INR 14,000 crore. Why has the cost gone up to INR 20,000 crore?
Actually, I would like to mention that it was initially INR 40,000 crore, but later on we have also developed one ethane handling facility, which was, in fact, not initially earlier. So around INR 2,500 crore is that ethane handling system, whereby we will be building one tank, ethane tank, and propane tank is already coming along with this PP plant. So because of that, and moreover, if you see other costs, and there is a soft cost also, if you like to, you'd like to see total hard cost is INR 16,069 crore. But there is a provision for inflation, rupee depreciation of INR 1,900 crore. Some contingencies have been provided, INR 541 crore, and just IDC, INR 1,600 crore. Margin money, INR 400 crore.
INR 4,600 crore is the soft cost over and above the hard cost of the plant. That has also been built in, in this project cost, and that's why it has come to INR 30,655 crore.
Understood. That's, that's very helpful. And lastly, any update on, the customers on payment of user fee on the previous year?
We are still in talks with customers, and shortly we will be coming back with a solution. Payment is still awaited, no doubt, but since we are only talking to them, and we are hoping that solution will come out, maybe in the next quarter, we will find that we are able to work it out.
Understood. That's clear. Thank you so much and have a good day.
Thank you.
Thank you very much. The next question is from Amit Trivedi from UBS Capital. UBS, go ahead.
Yeah, thank you. Sir, just wanted to understand that you will be doing a broad call, you know, another call, you are telling us, but I wanted to understand, like, what is the OpEx, what is the EBITDA and post commission of the project. If you can give it separately by, like, what will be the EBITDA on integrated basis on, you know, propane to propylene and CDHPP. Finally, if you're doing something on the propane handling as well. What are the different numbers? That way we know how much EBITDA is at least subject to the commodity, you know, volatility, and how much is the EBITDA which can be consistent.
I will just mention you are asking, so I will give you the numbers slightly. But detailed, you are asking break up of propane handling and, ethane handling. As such, things are not been there in the DPR, but we will work out, you can say that calculated number, but we will tell you later because that breakup is not readily available. But one thing I can tell you that profitability, there are three EBITDA and profit. So we have estimated that from the year it will start operating at 100% capacity, the generation of profit will be to the range of, INR 2,000 crore. So it is, likely that it will grow, and it will grow up to the target level, INR 7,000 crore, back in the end of this year.
So initially, we can say that INR 2,000 crore will start it when it is operating at 100% capacity. And EBITDA you are asking is around INR 4,000 crore. And what else you are asking?
Sir, just the timelines, like, when you will start commissioning this project, when you start the capacity, when is the zero date, and what will be the commissioning timelines?
Commissioning will be almost, you can say, four years from now, we can say. That will come on the end or maybe beginning of 2028.
Okay. And, sir, in the same breath, do you have an update on Gopalpur project and the other projects which we are doing now? When are we going to see 5 million ton capacity expansion at Dahej? And, when are you going to make a decision on Gopalpur as well?
Yeah. Gopalpur, actually, we have already finalized the documents, and the transaction documents are to be approved by board now again. After that, we will start on the project, because before finalizing the document and signing the lease agreement with the Gopalpur port like that, we cannot go ahead. So these documents have been now finalized by our committee. It will go to the board for approval, and thereafter, we shall start awarding the jobs for construction of various jetty and other facilities of the project. And from the board, we are anticipating that FSRU, which we require for this project, because we have undertaken FSRU energy tender.
Before that, we are going for consulting sources, so that we can consult whether there is sustainable FSRU available or not, and at the right price or not. That exercise is now being undertaken, and soon we will come to know if there is any FSRU available or not at a reasonable price. If it is not, then perhaps we will go for liquid terminal in that period of the project. Otherwise, also we thought that we'll go for liquid terminal after four, five years, six years. So in case availability is poor because of requirement of so many FSRUs in European region, because of import by Europe of LNG. So I think that has to be undertaken, and we'll come back to you with the information.
Okay. So just one observation, you know, from the stock price reaction today. So you have seen that, investors and markets have not liked, this idea of increasing CapEx to around INR 21,000 crore. But broadly, you can give them more confidence by maybe slightly increasing the dividend, rather than just staying at the similar level of dividend. Because like you mentioned, you are, reporting highest ever, profit in the first half of this year. And, we hope that in the second half of the year, performance remains strong. And with already INR 7,000 crore of cash in hand, that there is issue getting resolved. I think there should be more reward for the shareholders over the next four years. I think that only can give them confidence that you are confident about the project.
If you start to reduce the dividend, keep it to maybe INR 10 a share, that may not give a right signal to the Shareholders.
Right now, dividend we have maintained, and this is an interim dividend, INR 70 per share. But of course, your suggestion is well taken, and we'll take care. We will convey this to our management that we have to maintain the sentiment of the shareholders and keep the dividend high. But at least I can say that whatever we are paying, we will continue to pay, but we will try for the higher dividend, and perhaps, let us hope that we'll pay. One thing I can say that even after this project, the cash flow is such robust that it will not entice the dividend payment to the shareholders. So this will continue even this period of construction. As you know, we are going for raising the debt from the financial institution or banks. So equity will not be to that extent.
Only 30% equity will is required. You know, it's not, an expenditure which will be done in a single financial year. It will be over a period of almost four years. In a phased manner, this will be done, and accordingly, we will know the rates. I think, there should not be an issue as far as the dividend is concerned in future. We'll try to further, increase it as well as possible.
Great, sir. Thank you. Wish you all the best and wish you a happy journey to your team and your-
Thank you, Amit. Thank you very much.
Thank you, sir. Bye. Take care.
Bye.
Thank you very much. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, yeah, good evening. Just on this take-or-pay arrangement, could you help understand, like, is it on a cost-plus basis or, how is the arrangement?
[garbled]
The arrangement with Deepak Phenolics for the 15-year arrangement, is it on cost plus basis, take or pay basis? What are the tariffs over there?
Yeah, yeah, I will tell you. Because this is not a cost plus basis, basically on IPP price, plus handling charges, plus whatever insurance and GST and other costs. So it is import parity price, which we are going to ask from them. So import parity price of propane will be charged from them. Apart from that, we are also charging $41 as—o r maybe whatever number I will let you know later, but handling charges is there. So not only IPP price, but handling charges, plus GST and the insurance costs, all will be charged. So if you see the crack between propane and propane, it is same as of now, almost $400 per ton. So it will fetch a good price. It will not be lost.
Is there any advance to fund the CapEx that entails, ma'am, given that they are kind of off-takers of the CapEx?
Advance as such is not there. We will be only. It's only take or pay basis contract is there with them. If they are not able to take, at least 90% of the quantity, then take or pay charges will be levied on them. So it's a kind of like energy contract.
But even for the take-or-pay arrangement, there's no advance that you'll take from them, because we've seen the take-or-pay arrangement getting dragged on, and-
We are taking, this LC will be there, and that will cover Take or Pay also. 45 days LC will be there. Almost—
Okay, sure.
This is 45 days, LC will be there. That will cover this year's take or pay.
Sure, sure. And any specific reason to take a seven-year average? Because, like, we've seen, like, of late, generally the crack spreads on Petronet have been quite weak, and most of the players are struggling to make any decent IRRs on their investment.
If you see cyclical industry, and if you see the other industry, normally average is taken because it eliminates all uncertainties of any period. So that's why we are taking seven-eight, seven-eight years. If you take only this year price, maybe this may be low, but this will not reflect that true picture over a period of time. So seven-eight year period, in fact, eliminates any kind of abnormalities which may have occurred in this period. So that's why we have taken this. This, this taking care of any kind of uncertainties in any period or some cyclic movements. So all those things are eliminated when you take an average of seven years to six years.
Okay, sure, sure. Thanks. I'll come back to you.
Thank you.
Thank you very much. The next question is from Mayank Maheshwari, from Morgan Stanley. Please go ahead.
Hi, sir. Thank you for the call. Two questions from my side. First, from the project itself on petrochemical. Have you kind of done something around the experience of the PDH's in China, and where does Petronet actually kind of stack up better? Or any competitive advantage that you have or, say, anything that you have done in terms of study with related to China?
We have not done any comparison with China right now, but in fact, we understand what is happening in China. In fact, they are running their plants very well. I don't think that we have done any comparison with the plants in China. But in India, we have done all kind of studies in this action with PDH. Indian demand supply scenario is fine. We have got study conducted, we will demand in future. In case we are not going to manufacture, it will be imported into India from somewhere. What we thought that it is the right time that we should enter the business, and the demand in India is going to increase in future.
Further, we have already done some kind of assured contracts with DPL, and we've also sold some hydrogen. What we are doing, in fact, to a great extent, we have mitigated our project risk. Almost you can say 50% of profitability is assured business in our total project. What I have told you, almost 50% of that will be through assured business with DPL, between handling facilities and propane handling facilities. That is assuring there. And damage 1,000 is there, but that will not, or that will not be a risk to us. It's safe. We will be assuring also that at least we are assured that 50% of the profit will be coming from there. Sure.
Got it. And so the second question is more related to, like the competitiveness, of, of your projects versus, let's say, BPCL is starting up around a similar time, and some of the others are actually starting up in around one or two years, up here and there. So what is the competitiveness of this project that you could try to highlight to us versus all the others that are coming up in the country?
Yeah, I mean, one thing is that, you know, getting it done, and it has been the case in the past. It is how things are taken on the risk from our perspective. We are quite biased towards being able to do it well. So there is an advantage and disadvantage there. So it is there and the market is not really good for the time.
Sir, sorry to interrupt you, but could you speak really closely from the mic? Because your voice is sounding at a distance.
Yes, sir. Just to add it, we have competitive advantage in terms of two things. One is very obvious that we have our jetty, which is located nearby, and in other cases, it is not the case. We will have to lay pipeline to bring propane from jetty. Like in case of the— which has for its short plant, they have to bring propane from GNPT, which is almost 50 km away. So that is an advantage. Secondly, this is located at a place which is adjacent to our regasification LNG regasification plant. So we can save in terms of power cost, which is around INR 120 crores -INR 130 crores, because cold energy, which is being wasted so far because there is no usage in LNG plant, we can utilize it for cooling purposes in PDH plant.
So that is saving power cost to a great extent, almost more than INR 100 crore. The second reason is this one. So thirdly, that many utilities are there, which are common. So common utilities means there is no additional cost incurred for the PDH/ PP plant. So all this have in fact contributed to give a competitive edge over others. And moreover, as I said, that we have, I think, tie-up with customers, which otherwise is not there with other producers. So that is an advantage. So three core advantages I have told you.
I understand. Perfect. Thank you for this.
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, anything related to this QatarGas contract extension? Earlier you mentioned that at the end of this calendar year, there may be an update on the same.
Yeah, we are still going ahead and target is that only, December 2023. So we hope that this will be concluded before that, and the discussions are going on continuously.
Just to get an idea, will it be on the same volume or higher volume? Or will it be more attractive than the current price, what we are paying to the Qatar?
We are going for renewal of the contract. Renewal means it's of same quantity or same thing.
Okay.
Price part may negotiate, but otherwise the quantity will remain same.
Okay. Will it be more attractive than what it is currently, what we, the Qataris are giving us?
Maulik, attractiveness is a very relative word.
Let's say, is it cheaper than what we are paying today?
That's what I'm saying. Although we cannot disclose that part, whether it will be cheaper or the other, but whatever we have seen in the past, we have a copy for prices. I think it is also right time to review our long-term contract, contract as well.
Mm-hmm.
So, probably that will do a lot of good in the, to the market, in the, in the future. But at the same time, the negotiation is going on to get the best deal for the country.
Okay, got it. Thank you.
Thank you very much. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thanks also for giving this opportunity. One more question on the PDH/ PP project. Would you be able to share the sensitivity of the IRR to the margin assumptions? If the margin assumptions are, say, 20% lower than your base case assumption of $200 on propylene, to propane versus propylene, and $600 on PP versus propane, how would the IRR change?
The sensitivity, actually, if you want, we will have to present to you. I think, Manisha is, we will have to arrange separately, because these things cannot be explained in such a manner. And perhaps you are asking for sensitivity, but we will show it, sensitivity, how we have done it, right? We have done on all fronts, what kind of risk should be there, all those have been analyzed. And as I said it clearly, that SBI CAPS has prepared our risk report, financially analytical report. And they have considered almost sensitivity analysis of 11 scenarios, which include increase in product cost by 10% and the 5% decrease in product price. All those kind of things have been done. So in that case, project costs will vary in each case, so it has to be.
So we have done all kind of things. There is an increase in CapEx and project costs that has been analyzed. There is an increase in capacity utilization that has been analyzed, increase in OpEx by 10%. All those things have been analyzed, but these things cannot be explained or shown like this. So we will have to make a visual presentation on that. If you want, we will discuss all those things to you. But right now I can tell you that those things have been taken care, and SBI CAPS has done all the sensitivity analysis. And after that only we have taken the concept call. Yeah. So after that, let us also plan for another call or something. We have to plan which mode, whether it's a telecall or a kind of a.
Yeah, Microsoft Teams can also be, yeah.
So that we make a presentation also if we need to. But it will be only specific PDH only. Rest of the things will be covered here. So that it will be the sole question which will be remaining to be further explained to the market.
Just one more question on the Dahej expansion, which is underway. Could you tell us about the project progress across different modules and the current expectation of the target date?
This expansion of Dahej terminal is, in fact, going on, and the target is almost March 2025. It should be ready, expansion. So after May 2025, it should be operational. This is how we are going ahead. And, so the CapEx, you know, is very low. It's a low cost LNG, only INR 570 crores, so from 17.5 MMTPA to 22.5 MMTPA. So this is on time, and, as I said, that both the phases. Well, this is in two phases, from 17.5 MMTPA to 20 MMTPA, and 20 MMTPA to 22.5 MMTPA . So both will be completed by March 2025. So after that, it will be ready for operation.
Fine, sir. Thank you.
Thank you.
Thank you very much. The next question is from the line of Sanat Kumar from Value Research. Please go ahead, sir.
Yeah, can you hear me?
Yeah, I do.
Okay, thanks. Thanks for providing me this opportunity. I have only two questions. One is, what has been the regasification tariff, you know, in the last two years? The second question is the LNG price. Have you seen any hardening of the spot and short-term LNG between the two quarters this year?
As such, there is no hardening of the prices as we are seeing. Regasification charge, I should tell you, Dahej terminal, we are charging 59.99 MMBTU, and for Kochi, we are charging almost 85.09 MMBTU. So this is the tariff for Dahej and Kochi. And as far as the hardening of the LNG pricing is concerned, the spot market is little bit volatile now, but it is around $15 almost. But otherwise, long-term prices, which we are buying from Qatar, is around $12. So this is how prices are there, and they are likely to remain so in the next... I think it may go maximum winter season, it will go up to $17, $18, not more than that. This is our anticipation, and this is also anticipation of the market.
They are also not anticipating too much of soar potential in LNG pricing in winter season, because Europe has already accumulated more than 98% of the inventory. So there will not be any panic buying by European countries in this winter season. So keeping that in view, we hope that prices will remain like this from $15-$17, $18 maximum in upcoming winter season.
Okay. And the last question is basically related to the fact that the demand for polypropylene and all those things that we are coming up with. Do you see a very healthy uptake in demand in, say, next seven years? Or is it going to be on an average, which we have been seeing in India for the last five years?
It is going to be uptake because we have analyzed everything that how many times that is going to come up in the next five-year, ten-year period, and what is the demand it is going to be. Entire analysis has been conducted by a consultant, and he has shown in the consultant. We'll cover this in the presentation later, because we are putting all these details, but there is a shortfall is still as compared to the demand in terms of supply. So keeping that in view, we have taken this conscious call, because these are the questions normally is raised by members in the board also. And we have explained it very well that a study has been conducted, and India, there is uptick in the demand in the time to come, and compared to the demand, the supply part is lacking.
So even if you bring this plan, it still there is a shortfall in terms of for meeting the demand. So this is how we are able, but we'll cover this in presentation we made for the special presentation for PDH/PP plant later sometime after in the morning, all of you. And this will be shown to you there. And what is the demand perspective in the next five-10 years of PDH, which PP mainly.
Okay. Thank you very much. Thank you.
Thank you very much. The next question is from the line of Niharika from Aequitas Investment. Please go ahead.
Oh, hi. Thank you for the opportunity. What has been the Dahej revenue for the quarter?
The regas revenue has been INR 598 crore.
INR 598 crore. Okay. Update on the storage tanks of Dahej as well as Kochi.
Kochi, there is no storage tank construction right now, but at Dahej, it is in full swing and on target.
We're planning to finish it by September 2024, right? The tanks.
Before that, before that, it will be completed by then. Before that, by June, I think, like, it should be completed next year.
Okay. So, I just read an article that Dhamra terminal is started now, and the tariff is lower than Petronet by some 1%-2%. So do we feel that we'll be losing some?
No, no, no, no. This is absolutely absurd news. As far as I know, Dhamra's tariff is higher than the tariff. I can tell you what.
Okay.
It's around INR 59 of Dahej, and that is more than INR 60.
60.
More, approximately 68. It is on the higher side.
Okay.
So you don't get confused. It's not correct.
Okay, understood. On the PDH/PP, so with the Deepak Phenolics, which we have tied up with, so are we planning to tie up the whole 100% to 50%? Already you are tied up to 50, and are we planning to tie up the whole facility? So what's the plan for this thing for the future?
Yeah. Again, let me try and give you some of the total capacity of PDH is 750 KTA. Out of 750 KTA, 250 KTA have been tied up with one party, which I just told you, Deepak Phenolics. And 500 KTA of propylene will be converted to polypropylene. That should be sold in the market. So it's like that.
Okay.
But that part has not been tied up because that is market driven, and if you look at the price, the margins, the spread, which is very high, because if you see the propane price, it is around $600-$700 per metric ton. And if you see the prices of PP, polypropylene, it is around $1200-$1300. So the gap is big. That's why we have decided to come in this business, because the margin is very high. Maybe sometimes it is not that high, but that cannot be a reflection of the entire period of the product life. It's cyclic in nature, so you cannot say that this will remain only on the lower side. So what I have, what we have done, we have taken the average. While doing the sensitivity, we have taken average of seven years price.
The seven years price is good to reflect the right price, because it eliminates all kind of uncertainties or whatever fluctuation it might have taken over a period of time. So we feel that even though margins may be somewhere less, but if you take the average of five to six or seven years, it will bring the true picture, and that margin is good as per our analysis.
Understood. And so we were also planning the third jetty at Dahej, which was also supposed to handle propane and ethane. So is this the ethane handling which we are talking about, which is a part of INR 21,000 crore, or this jetty INR 1,700-odd crore for this jetty is altogether different?
jetty part, we have already got approved because[garbled] the products and ethane and propane. So it is not part of project. It is already in the taking, because in any case, we have to build the jetty. So we have already done that, and CapEx is around INR 1,635 crore, INR 1,636 crore, like that. But this is not part of project.
Okay. You mentioned some INR 2,500 crore of ethane handling, that is separate, and which is a part of-
That is, that is the inside battery limit of plant.
Okay.
The jetty part is different, because if we take jetty, it is 3.5 km away from the plant. There has to be a pipeline laid to bring the product to the place, obtain energy, and it came to other plant. That part I'm talking of jetty. If you see 2,500 sq m, it is inside the battery limit. We have to create tank for keeping and other facility for operating that tank. That is costing us INR 2,500, which is part of INR 21,000, which is part of this INR 21,000, INR 2.635-25.
Okay, understood. That was it from my side. Thank you.
Okay. We will take one more question.
Sure, sure. Thank you very much. The last question is from the line of Gauri Anand from Old Bridge Capital. Please go ahead.
Thank you for taking my question, sir. My question was on the future LNG supply. How should we think about it, now that we know that Qatar is adding a lot of capacity? We know there is some capacity which is idling in Russia. We know all this large, you know, exporting LNG exporting countries are moving to alternate fuels. You are a very formidable player. You are expanding your capacity. How should we... And we, our consumption is very, very small in the global scheme of things. So how should we really think about future availability, in light of the supplies coming out of all these exporting nations?
See, if you look at the supply side of LNG, it is going to increase the future to a great extent. Because many of the facilities are coming up in the next three, four years, maybe by 2027, 2027. So almost 150 LNG capacity will be more there, and even more than that. So what I'm anticipating that the availability will be huge, and there will not be enough of LNG in the market. And it looks now that LNG is in high demand, and there is a scarcity of supply. It looks like that after three, four years, it will not be true. Qatar is already expanding its project from 77 million tons to 126 million tons. So definitely there will be sufficient energy in the market.
In India, the consumption is going to increase for LNG, because if you look at the kind of trust which is there with the government of India to increase the consumption of gas and make India a gas-based economy. And China, they also want to increase the share of natural gas from 6% to 15%. So I think, alternatives to this natural gas or other fossil fuel is not ready as of now. Maybe after 30, 40 years, maybe there, and it still, if at all, continues to be eliminated all through political and oil. So these are coal, they have to be eliminated.
Gas will continue for next, I think, more than 100 years, because it, it's still a very emission free and clean fossil fuel, and it can complement with renewables, it can complement with other sources of renewable, like hydrogen and others. You can see it's not, it's a basket of energy. You cannot see any development of an energy source at the cost of replacement of production. It's still so many years have gone and coal could not be replaced. And this is the first priority of the government is replace those highly polluting fuels like coal and, if at all, to come into oil, crude oil, all those things. So these are the different sides. The natural gas has to be promoted, and government will continue to promote it.
In my view, the consumption of natural is going to increase in future; it will not come down. Other alternatives will come; they will also be coming, because the demand is going in a big way.
Right. And, you know, I get that, sir. I just wanted to know on, you know, how should we think about the supply security, especially the long-term supply security? And if you can specifically also comment on Russia, sir. I mean, at least we could strike a deal and lap up all the crude from Russia. You know, a lot of the thing was actually piped into Europe, and it's all idling now. Is there an evacuation challenge, or if you can comment on Russia specifically, that would be helpful.
Supply side, we first have to comment that how much contract India has. India has around 20 million ton contracts for LNG, putting all these together, because Petronet has 7.5+, 1.4 to 7.5 million tons with QatarGas, 1.42 million tons with ExxonMobil, around 9 million tons, and another 1 million. So around 10 million tons, you can say, we have. And, apart from the other, GAIL and IOCL and BPCL, they also have contracts. So total 20 million ton contracts are there. Now, if you see supply side, how we will ensure more contracts are being entered in time to come, and you will see that there will be enough long-term contracts.
So the people have realized that there should be long-term contracts only because the spot prices we have seen last two years, how volatility, how sometimes they have been in the past, one or two years. So it is not a supply source which is dependable. So long-term contract is solution, and in fact, whatever contracts we have, more contracts will be entered, and many buyers in India are going for that kind of contracts from the world. Second question is regarding Russian supply. Russia used to supply the great extent independently through pipeline. But as far as the facilities are concerned, there is no energy facilities kind of thing readily available.
There is no—they have two projects, one is Yamal, another is Sakhalin-2, but both of them have long-term contracts tied up, and the, and the long-term of Japan, China continue to offer volumes from these projects. Another project, which is actually LNG project, because of the sanction, that project is now in a limbo because they are not able to get technological support. So there is no new project which is coming up in the future, except some small projects in the medium and also. There is no surplus LNG supply available for them. The question is that, how their supply constrained there? They supply whatever is available in terms of energy, it has already been tied up. And for balance, there is no liquefaction market supply.
So you can say that European gas, which has been curtailed, there is no immediate line of Russia to send that through LNG route. So we cannot. It is not so clear as of now. So I think China is joining them maximum gas to pipeline, because China has got a pipeline from Russia. So they are coming to the Russian rescue, because there is no energy from Russia as of now, but they ensure that sanctions are there on Russia. So it is not feasible also as of now.
Okay. Thank you. Thank you so much, Vinod. All the best to you.
Thank you.
Thank you very much. We take this as the last question. I would like to hand the conference over to Mr. S. Ramesh for the closing comments. Please go ahead, sir.
Hello. Thank you. Before I let you go, sir, I would like to ask few questions. One is, in Kochi, we still see the capacity utilization is subdued. So the, given that the LNG prices have declined substantially, do we see improvement in the utilization of Kochi in the second half or sometime in FY 2025? How do you see the situation?
Basically, see, it is all about the cost of alternate fuel versus LNG. So yes, we do see opportunity of few customers which went in the year 2021 on oil products after running on gas for a few months. And hopefully because oil has gone up and the European storage is almost at 98%-99%, and winter prices are subdued as compared to the last year. So we do expect LNG will be competitive to alternate fuel and the substitute utilization could increase, but it's all about, like, geopolitical crisis now going on between Israel and Hamas. So keeping fingers crossed, it's unpredictable.
A housekeeping question. Can you share the details regarding inventory gain or trading gain and the Ind AS impact?
Yeah, the trading gain, just a second. The trading gain has been INR 19 crore, and the inventory gain has been INR 123 crore.
Okay, and—
Yeah.
What about Ind AS impact with the currency impact?
Yeah, the Ind AS impact is INR 161 crore positive at gross margin level, INR 37 crore forex loss, and INR 8 crore positive at the other associates level, then depreciation, INR 84 crore, and interest, finance cost, INR 72 crore.
Okay. Thank you very much. With that, we draw curtains on this call. Let me thank the management of Petronet LNG for taking time out to join this call on behalf of Nirmal Bang Equities. I also thank all the investors for participating in this call. Thank you very much and have a good day, and wish everybody a happy Diwali in advance. Thank you very much.
Thank you. Thank you. Happy Diwali to all of you. Thank you.
Thank you very much. On behalf of Nirmal Bang Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.