Greetings, ladies and gentlemen. My name is Harshvardhan Dole . I work at IIFL Securities, and it's my pleasure to host the Petronet LNG management for the third quarter earnings call. I'll briefly introduce the forum. Today we have Mr. VK Mishra, Director of Finance; Mr. Rakesh Chawla, Group General Manager and President, Finance; Mr. Gyanendra Sharma, GM and VP, Marketing; Mr. Vivek Mittal, GM, Marketing; Debabrata Satpathy, DGM, F&A; and Mr. Ashwani, who's also part of the team. Without much of a delay, I would request Director of Finance to make the opening remarks, subsequent to which the floor will be open to Q&A. Over to you, sir.
Yeah, very good afternoon to all of you. And first of all, I would like to convey that this quarter has been very optimistic. And if you look at the throughput in the Dahej plant, it has been 222 TBTU. Although it is less than the previous quarter, but still it is able to match with the corresponding quarter of the previous year. So it has been 222 in the corresponding quarter of previous year. And overall, the throughput has been 235 this time this quarter, including Kochi and Dahej, and it has been 233 TBTU in the corresponding quarter of the previous year, although it is less than the previous quarter, which has been almost 254 TBTU.
If you look at the nine-month throughput, it has been 645, as against 679 in the similar corresponding period of previous year. The overall throughput, if you look at for the nine-month period, it has been almost 677, as against 708 of the previous year. So throughput has been less, but it's still profitability if you look at, it has been very high, and the PBT for the quarter has been INR 1,172 crore, as against INR 675 crore in the—as against INR 902 crore in the corresponding quarter of the previous year. If you look at the PAT, it has been INR 878 crore, as against the PAT of INR 675 crore of the similar corresponding quarter of previous year.
And it has been less than the previous quarter, of course. It was earlier, PBT was INR 1,243 crore, and this PAT was INR 927 crore. But if you look at the performance and compare it with the corresponding quarter of the previous year, we have been able to get a better result. And this better result has been because of the higher gas charges, index impact, inventory valuation, and also trading margin. So these are some of the factors which have contributed to the growth in this particular profit, which has been there.
If we compare the nine-month result, we have been able to achieve highest PBT so far for the nine-month period, which is at the level of INR 3,112 crore, as compared to INR 2,625 crore in the corresponding period of the previous year. PAT has been INR 2,323 crore in the nine-month period this year, as against INR 2,339 crore in the corresponding period of the previous year. The difference has been because of the tax rate difference, which is almost to the extent of INR 400 crore in the previous year. That's why the PAT is almost similar to that which was there in the corresponding period of the previous year. But PBT has been higher this year, so it is. It matters more.
If you look at the result, this has been possible that we have been able to recover from the pandemic this year, the losses we have incurred in the first quarter, but after we are able to reach the pre-COVID level, and this has been possible due to our this effective commercial planning and operational efficiency. That's all from my side. Now I open the house for the question.
Yes, sir.
One more important thing which I would like to mention here, that last year there was a resolution for related party transaction. As you all know that we have most of the contract signed with our offtakers, who are also our promoters, and they are related parties to us. And more than 95% of the transaction are in fact through these offtakers and promoters. And if you look at the turnover of last year, it was INR 35,452 crore. Out of that, INR 34,000 crore was transaction were with only these four parties, ONGC, GAIL, IOCL-
BPCL.
and BPCL. So, what I feel that last time somehow, there was some misunderstanding among the shareholders, and this transaction, this particular resolution could not get through. So we are proposing it again. It has to be approved in any case, if you want to protect the investors' wealth, because this is the permission to do the transaction in next financial year, from first April, with the related party. More than 90%—more than 95% of our bottom line is from these transaction only. So I will request whosoever is holding portfolio of our shares, they should vote in favor of this related party transaction resolution, which is very shortly being put up to the shareholder for voting. This is very important for transaction for financial year 2021, 22. So that's all from my side.
Thank you. Now house is open for the question.
Thank you very much, sir. Ladies and gentlemen, I request you to please raise your hands, and then we'll sequence the questions. I'll just take a few seconds for the question queue to assemble. Thank you. Moderator, can you please unmute Pinakin Parekh? Pinakin, go ahead, please.
Thank you. Thank you very much, Harsh. Good afternoon to the management. Sir, I have two questions. Now, seasonally, this tends to be a weak quarter, but it was a very strong set of numbers, and management highlighted multiple reasons, inventory, higher utilizations. So can you give us a broad sense of, if you look at the EBITDA per MMBtu, that has gone up around 5%-7% Q-on-Q. So in this quarter, sir, what is the inventory gain that is there? And given that, you know, LNG prices have been all over the place in January, December and February, what is the outlook for the March quarter, in the sense that are we seeing volumes getting impacted? Should we see more inventory gains or losses?
Can you give us a sense of this, sir?
There are two, sir. There are two numbers, Pinakin, that needs to be noted. One is the inventory valuation gain is INR 60 crore in this quarter. There is a trading margin of INR 54 crore that was earned because of the spot volume transactions. So these are the one-off things, and rest for the volume outlook, et cetera, will be answered. Yeah. Actually, as we have already, this has already clarified that inventory gain is there. As you look, the prices have been very high in this quarter, at the end of this quarter. And if you look at the kind of pricing which has been there, it has almost gone to $32, it has been transacted.
So this kind of surge has never been witnessed so far. But of course, this is a one-off occasion because extreme winter being in China, Japan and South Korea. So because of that, prices have been so high.
But otherwise, if you look at now, it's coming down and almost $7-$8 it is ranging. And I hope that in time to come, it will be in the range of $5-$6. And if we look at the long-term prices, it's stable. So in this quarter, if you look at the long-term prices were very, very low as compared to spot prices. So this is very significant because the demand for long-term was higher than the spot. And spot cargoes were very less in this period, in the third quarter. But next quarter, since the prices will be little bit subdued, so most likely it will be in the range of $5-$6. So many spot transactions will also be conducted in that quarter.
And of course, we will see the spot cargo coming to our terminal also. So we foresee that there will be some increase in the volume in the fourth quarter because of this prices being low as compared to third quarter. So this is our hope that it should be good number. Absolutely, no doubt.
Understood. Thank you very much, sir. My second and last question is that, while there is now no more talk about the Tellurian deal, there is talk about a new terminal at Gopalpur. Sir, what we have understood is that Qatargas has launched its mega expansion of LNG, and is looking for equity partners who will buy in guaranteed volumes and invest in that project in terms of an equity stake. And Petronet is looking for long-term LNG deals. So is the company open for such an investment in Qatargas, if the proposal were there, or will the company stay away from equity investments and look only for pure LNG term agreements?
See, it's actually a two proposal you are talking about. First is investment and second is buying LNG. I want to segregate these two things. It should not happen that we should merge the purchase of LNG with investment. If at all investment is so good that that gives us the return, which is almost 16% equity return, then of course we will invest. But that will be independent decision from this buying LNG. Right now, LNG is available in plenty, and there is no lack of LNG in the market. So it's not necessary, although we have not come across right now any proposal from Qatargas. So we cannot comment on this, but in any case, if there is any, then we have to see what is the return on investment, first part.
Second, the price of LNG should be good so that we are able to have the cheapest LNG imported into India. So this is, this is actually something very, you can say, it's very paradoxically, paradoxically related, because once I am investing, I always ensure that there should be higher return. And once I am buying, I ensure that I should have the cheapest price. So there is a trade-off to be worked out in such a situation, but we will have to see if there is any proposal. Right now, there is no proposal as such from Qatargas. So, it's only LNG, which is, we are thinking that we should procure LNG, and, it should be at the reasonable price, and it should be a flexible contract, if at all.
So this is all what I want to say in this regard.
Sure. Thank you very much. Next, can you unmute line of S. Ramesh?
Hello?
Yeah, go ahead, Amish.
Yeah. Thank you, Harsh. Good morning, Mishra-ji, Chawla-ji, and Satpathy, thank you very much. So the first question is, what is the current volumes you are able to pump through the Kochi-Mangalore pipeline? And, when do you see the pipeline helping you achieve the increase in the throughput in the Kochi terminal?
Yeah, yeah. Very rightly you have asked me this question, because you must have seen that in November, this pipeline was commissioned, Kochi-Mangaluru, and since then, there has been volume also through this pipeline. So almost 0.4 MMSCMD is being taken by MCFL. And very recently, OMPL has also, and most likely it will be in the range of 0.35-0.44 MMSCMD. This is how it is going now, but in future, maybe by this month end or maybe beginning of next month, MRPL will also start taking some volume. But we see the ramp-up of almost additional 1.55 MMSCMD. At present, if you look at today's throughput, it has been very encouraging and very optimistic. It has been 5 MMSCMD, which means almost 1.5 MMTPA of the capacity is being utilized.
So we hope that, it will be, in time to come, maybe, second, third quarter, this volume will ramp up, and, possibly it should be in the range of 5 MMSCMD, which means we will be utilizing it almost 30% or 28% of the capacity by, next year. And so this is how we, just, assume that it should happen. And, because the throughput is increasing day by day, and 3 customers are already lined up. So we are very optimistic about the utilization of our Kochi terminal in time to come, which will be in the range of almost 30% in the next financial year, or maybe by third to fourth quarter.
Yeah. So the related question is now, if you were to be in a position to sell the equivalent of the 5 million tons per annum of capacity in Kochi, technically, as on date, can you run the terminal at that full capacity? Do you have the logistics in place to, you know, handle the ships? And can this pipeline move all this gas, assuming that we are able to reach a demand of that equivalent 5 million tons per annum?
So it's actually a hypothetical question, but I would like to clarify you that this volume can be increased because there are two aspects how we can just enhance the utilization of Kochi terminal. First one is that city gas distribution projects are coming along the pipeline. Almost 10-11 cities fall along the line of this Kochi-Mangaluru. And moreover, another trunk line, which is expected in next 1 or 2 years, is Kochi-Koottanad-Bengaluru pipeline. Because that connectivity is very much needed if we want to utilize this entire capacity of 5 MMTPA. So that is already in pipeline, and of course, GAIL is awarding the contract. Some portion has been completed, and up to Kerala side, it has been completed, and the Tamil Nadu section only it is remaining.
We hope that this Coimbatore, Bengaluru, will be connected very shortly. So then we can hope that these cities will also be connected, and industrial belt will be there to consume more and more gas. But, as of now, I cannot estimate whether 100% capacity will be utilized after that. But of course, then it will be more than 50-60% capacity utilization, which perhaps is good enough. And of course, then future, more city gas, the gas distribution projects will also come up. Like I have told you, along the this Kochi-Mangaluru pipeline, there are 9-11 cities which are there. Similarly, there will be more cities along Kochi-Mangaluru pipeline, so they will also be passed through this pipeline. Then perhaps we can think of more consumption, and more utilization of our Kochi terminal.
Thank you. That was helpful. I'll join the queue.
All right. Thank you. Can you please unmute line of Probal Sen?
Thank you, Harsh. Am I audible now?
Yes. Yes.
Yeah. Afternoon, gentlemen. Thanks for the opportunity. I have two questions. One, this news event that you had put out about setting up a new subsidiary for LNG bunkering and gassing up and, you know, cooling down. I had two questions on this. One, you have already done reloading cargoes at Kochi even earlier. So does this mean that you already had the GUCD capability, or is this something new being set up? And with regard to the entire subsidiary, what sort of investment are we looking to put in this new venture? That was my first question.
Yeah. Actually, this new company has been formed basically for the GUCD operation, gassing up, cooling down operation.
Yeah.
Which are bunkering services , and also other services, related services like reloading and other things. As of now, we are already doing this particular work of GUCD. But at the same time, if you look at there has been an SEZ in, SEZ at Kochi, where GAIL was a, a unit, and it has exited from SEZ. Now there is no unit in SEZ, and as a result of that, there is a withdrawal of tax benefits by the SEZ authorities. So what's happening is that almost INR 17 crore-INR 18 crore of tax, which we used to save because of being in SEZ. We are not able to do it now, because the SEZ benefits have been withdrawn subsequent to exit of GAIL from the SEZ.
So now, we have been asked to put up a unit there so that existence of this SEZ can be drawn. And because of that, we are having this separate unit in SEZ through this new company, subsidiary company. And perhaps, investment is not very high there because this is some service operation only. So this will be very minimal investment will be there, but of course, some modification will be carried out in future. And for the bunkering services also, we need to carry out some modification in JT. So these are something which I wanted to share with you. And apart from that, you are asking what is the future plan. If you look at the future plan, it's an opportunity for growth also for PLL.
Because what we want to do that we have already conveyed to you that we are having a plan of putting up LNG station along highways and Golden Quadrilateral and other places. So we need to have some kind of a company where we can do this kind of business. So perhaps all this business, which is basically a retail business, can be undertaken through this new subsidiary. And PLL, as it is, will remain a parent company, which is doing the trading of LNG and other things.
We feel that this subsidiary will help us in growth of PLL, because we have some other plans also, like CGD projects are coming. In future, we may think of putting up these projects within this new subsidiary only. So this is our thought process, and basically, it's a growth planning for PLL. PLL, as such, doesn't want to engage in retail business, and perhaps in future, we would like to undertake more business in this new subsidiary, apart from this Kochi SEZ operation, which we are undertaking, like GUCD, bunkering services and other services. So this is how... And investment is not much right now, as I told you that-
It's not required. But in future, whenever it will be required, we'll infuse through equity participation, and it will be a 100% subsidiary of Petronet Energy Limited. And name, first I say, name has been approved by ROC, and new company will be Petronet Energy Limited.
That's very helpful, sir. If I have one more question, if I may. The second question was just confirming what Mr. Ramesh was asking earlier about the Kochi-Bengaluru pipeline completion. If I understood you correctly, FY 2024, one would expect to have even the Kochi-Bengaluru link up up and running. So then, technically speaking, Kochi should be able to do between 2.5-3 million tons or so, give or take.
I hope so. 60%-70%, it should be utilized there, because that will be connected to national gas grid also. Cities along this pipeline will be connected through this pipeline. And perhaps then, the consumption will increase like anything. So that is an area which is not having any connectivity, so gas consumption is not there. So just to have that pent-up demand, we have there, and this latent demand is there, but that is not being fed through gas. So we have to think of it, and then a lso, the utilization will increase like anything.
Right. Sir, one last question, Sri Lanka project update, if you can give any color, what is happening there?
Sri Lanka project, basically, if you look at that project, is still under discussion. We had a series of meetings with the chairman of Board of Investment of Sri Lanka. Because the chairman who was there earlier has been, has retired and a new person has come in there, so he's understanding the thing. So we had a meeting in the month of January with the chairman of Sri Lanka Board, the BOI, and they have asked a few questions, but we have clarified all the questions. So we, along with Japanese consortium, are going for this, and we want this to be formulated on G to G basis.
Of course, we have requested government also to help us in just materializing this project, so that in a very short period, we can start construction activity for putting up this terminal over there. Actually, factory rather, not terminal. Of course, we are very optimistic about this project. Hopefully, if this government cares, because it's now pending on the part of Sri Lankan government, so they have to make a decision. So if it materializes very shortly, then perhaps we will think of it in time.
Thank you very much, sir. I'll come back if I have more questions. Thank you for your time and all the best.
So, can we mute, unmute line of Dhaval Joshi, please? Dhaval, please go ahead. Dhaval? Dhaval, just on. Go ahead, please. Unmute the line from your side as well. Yeah.
Hello, is it audible now?
Yeah. Go ahead, please.
Yeah, yeah. So thanks for the opportunity, sir, and just one question from my side. So the new fertilizer companies, you know, units which comes on Urja Ganga Pipeline. So just wanted to know from you, is there any discussion with you guys in terms of sourcing of LNG, and you know, for feeding their you know, as a raw material for you know, fertilizer. Is there any you know, talks have going on right now for incremental volumes?
No, there is no discussion as such, but, of course, we are already supplying gas through our contract of RasGas and ExxonMobil. So there is no additional volume which has been requested by GAIL or any other offtakers by RCF. So right now, there is nothing in discussion. But need is there, because, sometimes even GAIL is having its own portfolio, maybe that they may feed it through that portfolio. But if we'll be asked, by GAIL or RCF, we'll definitely let you know.
Okay. The reason being I'm asking this question is like, you know, that last year, I had a discussion with them in terms of the, you know, sourcing of gas. So they have talked about, you know, sourcing of gas. It's a blend of mix, both domestic as well as, you know, LNG. So that's the precise reason I'm asking these questions. Or is there any talks between you and GAIL on that incremental volumes or completely no, nothing as of now?
GAIL and IOCL.
Fine. Thanks.
Thank you. So can we unmute the line of S. Varadarajan, please?
Yeah. Can you hear me now?
Yeah, Varadarajan, go ahead.
Yeah, thank you. So I have two questions. One, of course, any update on the Kochi tariff? And secondly, OpEx has been low last quarter, and this quarter as well, relatively low. So should I assume some of these costs are still being postponed? Thank you.
I couldn't hear you. Repeat your second question.
Yeah. The OpEx has been low last quarter as well as the Q3. So should I assume some of the costs are being postponed even now, or is there some other reason why the costs are low?
First question is... First question, also tell me.
Yeah, Kochi tariff update, sir.
Kochi tariff update, I'm just giving you. Second question will be answered by Debabrata. So first question is Kochi regas tariff. So it has been, as you know, decided by board, which has been in the range of INR 79.14 in 2019. So that is being charged, but still the discussion is going on, and perhaps we'll reach a conclusion very shortly, maybe next quarter you'll come to know about it. And right now, we cannot disclose anything about that, but as you know, we have given them a very reasonable tariff of INR 79. So we hope that it should continue in future also.
The OpEx trend, sir?
OpEx, Debabrata will reply. Debabrata, please reply to OpEx.
So the OpEx, as rightly said, during this period of pandemic, there were certain expenditures like publicity and repair, maintenance. Those are deferred for future. And power cost was lower because of the Dahej volume being lower from the third quarter, from the second quarter. So these are general deferment and general lower expenses because of the volumes. So this is the explanation to the lower OpEx.
Thanks, sir. I'll come back for a few more questions.
So thank you. Next, can you unmute line of Anubhav Agarwal?
Hi, can you hear me?
Yeah, Anubhav, go ahead.
Yeah. Good afternoon, gentlemen. First question is on the utilization. So in month of January, the utilization of Dahej terminal seems to have fallen to, roughly about 85%. And first, is, would that be a correct assessment? And secondly, how we are doing in February?
Utilization in January, we are not talking, although we are talking about the third quarter. But we have February and February and March, where we can think of, but I'm not sure how much is that. Exactly, we have not worked out. As we know, because of certain reason, we very well know that energy prices have been very high, and spot cargoes could not be procured in this period because the prices are so high. So only offtakers preferred the long-term volumes. So that, that's the only thing I can just tell you right now, but this particular question will be answered in next time. Because right now it is premature to disclose anything month-wise. So it's a quarter ending only we discuss with you.
Of course, there has been a reason, which I have told you, that prices of energy were very high. Spot cargoes we used to be procured in this period may not have been procured.
Things have-
Sure.
Sir also mentioned, so things have improved in last few days, and prices have come down to reasonable levels, so things are picking up. That's all we would like to add on.
So it will increase now. Spot cargoes will come now because prices are as much as almost long-term gas, so... and it may be even lower, spot prices. So then it will be using those volumes also, the spot volumes. So perhaps this will increase in future.
Sure. I have one more question on you, the alerts. You mentioned about Dahej expansion further to 22.5 million ton. Just wanted to check, what's the timeline for this phase of expansion? And on the current, the land that we have, what is the maximum Dahej can go up to?
Yeah, actually, if you look at our expansion, then first phase we are going to increase it to 20 MMTPA. So maybe, by adding 2 more tanks, which we are planning to have, for which, tender is already in the process. So we will undertake that work, and it will take around almost 36-40 months. And perhaps the 3-year period is the period when we can expand up to 20 MMTPA. So, then we have, next phase, we will have 22.5. So maybe another 2-3 years may be there. So like that, we have planned right now, but 20 MMTPA is our target first, and then we can think of, 22.5 MMTPA.
Sir, just one clarity. Beyond 22.5, is there a, like, theoretical capacity of Dahej can reach to what number?
We don't have any plan, and we have not checked it, but perhaps right now, this is the maximum capacity I think we should have, because when we increase the capacity, we should have more tanks and other things. So, the facility and the infrastructure is required for enhancing the capacity, and then this, increase up to 22.5 means it's almost as good as almost 4-5 terminal. If you compare with the current terminals in India, with 5 MMTPA capacity, we have almost 4 at one place. So that will be the magnitude. So it's not a very small thing. But I say that it's, maximum we have planned is 22.5. Right now, we don't have any plan, and we have never checked the technical feasibility also from that point of view.
Okay. Thank you, sir.
Next, can you please unmute line of Chinmay Gandre? Yeah, Chinmay-
Hello.
Yeah.
Yeah. Can you hear me?
Yes.
Yeah. So my question is with respect to... Sorry, I joined in a bit late. So my question is with respect to the domestic gas. So around 5 million LNG of gas is going to is in the market from Reliance, and maybe additional 7.5 also they have kind of bid out. So how would that impact in near-term to mid-term with respect to the our volume, especially on the Dahej side?
Okay. Actually, you are rightly saying that it's increase in the domestic volume. It's true that it is coming up 5.70. First, they have already tendered, and the bids have been invited, and again, 7.5 they have done. So I think this volume is basically, if you look at, this is high pressure, high temperature gas, which is being sourced to KG-D6 area. And perhaps that will be very high price gas also, because if you look at the domestic price, it's at present very low, but maybe in future it will be in the range of $2.5-$3. But this high price gas is still costing $4.06 per MMBTU, but this will be in the range of almost $5-$6.
So that gas, of course, will help us in just supplying domestic gas to the customer. But LNG is also sourced, is also not very costly as compared to this high pressure, high temperature gas. So I think our volume will continue to be there. Whatever we are importing, demand is there. And in future, if you look at the city gas distribution projects, which are coming up next 5-8 years, so we have very optimistic outlook in time to come. Maybe by 2030, we will have consumption of almost double the current consumption. So right now, if you look at, we are utilizing only 43 MMTPA of gas as per last year estimate. So it will increase to almost double. So consumption will increase.
So entire domestic and import, imported gas will further increase, to my view, because if you look at the prospective imports in future, it will be double. Right now, we are importing only 23 MMTPA, but in time to come, by 2030, it will be double, almost 46 or 48 MMTPA. Because the consumption pattern is so high. If you look at the government thrust has been that we have to increase the share from 6%-15%. And if we take that share from 6%-15%, we need to consume at least 200 MMTPA or more, 60 or 70 MMTPA. That means the outlook is very optimistic, but of course, we are not saying whether we will reach there or not, but at least it will be double of the current consumption which is there.
So this is how I am perceiving it, and perhaps, this demand, whatever is there, as the LNG will continue to grow, even at a higher rate every year. Domestic gas, whatever it is there, even after consuming that, the demand cannot be met. So it will. The demand perspective is very high. People are still requiring more and more gas, particularly after this, laying of more pipeline and the natural gas will be in place in next 4-5 years. So that will help us in, this just being a consumption of natural gas in India.
So, but, medium term or short term y ou say something on this particular aspect, please.
Chinmay, good afternoon, I'm Gyanendra Sharma. There are, couple of more points to add to it. As you might be aware, PLL is having long-term sale and capacity agreements. So any, increment from domestic production is not going to directly affect PLL as such. It may be having impact on other merchant terminals, without naming them. Nonetheless, I would just say, Dahej plant is having the extraordinary strategic advantage of connectivity with almost all the pipeline. You may be aware, the pipelines are growing up, and there are new loads coming for a demand, additional, adding the additional demand. So whatever domestic production comes into, the demand centers are also coming in. So the LNG demand in country as such, is not going to go down. It's increasing every day. Last year it was around 23+. Now it is estimated.
I mean to say in 2023+, and now it has become 2026+. So you would appreciate the number of pipelines increasing and to match the vision of the government and the need to go consume gas instead of consuming the alternate fuel, crude oil base. So it is making sense that LNG will continue growing to cater to the demand, but nonetheless, Dahej will not be at any disadvantage because of this, domestic production.
Thank you.
Thank you.
Thanks, can we take Vidyadhar Ginde next? Vidya, your line is on mute. Go ahead. You, you'll have to unmute from your side.
Yeah, I am unmuted, I think. Can you hear me?
It's audible.
Yeah. So my question was on the same lines. Given that domestic gas production in the next few weeks, months, is likely to go to about 13 MMSCMD from KG-D6, and with another field coming later this year, maybe by end of FY 2022, the volumes from KG-D6 could be as high as 20 MMSCMD. So do you think that in FY 2022, Dahej volumes are likely to be lower than FY 2020, and maybe even less than FY 2021, basically less than 100% utilization? Is that a possibility?
No, no. There is no possibility. These contracts are signed back-to-back, and these are all take-or-pay type of contracts, so there is no possibility of any-
Sir, your contract is for 15.75. I'm talking of 17.5 or 18.
Yeah, yeah. So 15.75, I think, is a short.
That, I agree.
Apart from that, whatever volumes will be there, I think spot volumes will still increase, as Mr. Sharma has already indicated. Even this year, 2021, the outlook is that almost 26, more than 26 MMTPA will be imported as compared to 23 MMTPA last year. So I hope that this will continue even after this introduction of new gas, which you are saying, 31 MMSCMD. So we don't foresee any reduction or any decline in the utilization of our Dahej terminal. We'll continue to utilize that to the fullest.
Okay.
Just to add, so 15.75, beyond that, as you know, we do extraction for, you know, ONGC, C2, C3 plants, so that is on top of it. Some of the Gorgon volume is also diverted over here. So to that extent, our capacity is more or less fully booked. And secondly, as we, as we mentioned previously also, the, the increase in, gas demand is happening in a massive way. Last year, more than 3 million tons. Despite the COVID impact, the incremental demand has increased, as far as LNG is concerned. Secondly, as we mentioned, of this new 7.5, as you would have, noted, most of this gas has been consumed by Reliance for its internal refinery. So this will impact some other terminals, but not directly Dahej.
Now that you brought up this Gorgon thing, with Kochi now, with this the pipeline done, won't a much higher volume of Gorgon go to Kochi now?
Some of it would get diverted, but on top of it, we do buy spot cargoes. Previously also, we have purchased from some other consumers, so that may happen over here also.
Okay. My last question: the volume reduction somewhat in January 2021, was it mainly on the tolling volumes, given that your RasGas should not be affected at all? And so if that is indeed the case, then how does it play out, this take-or-pay thing? Is it a quarterly thing or an annual thing? In any case, even if it's quarterly or annual, you should be taken care of in March, in the March quarter.
You are right, absolutely, Vidya. So it is, of course, an annual requirement to meet the contractual commitment. So there are flexibilities built within the contract, wherein quarterly they can - it can be lowered, and subsequently it can increase. And it, it was very temporary, because it was only on the tolling volumes we saw the impact.
Can we assume that even if the utilization is less, you will get some take or pay, and you will largely be taken care of on that 15.75 kind of thing?
Yeah.
No, no.
I would like to intervene here. The demand has not disrupted. You must appreciate, even the COVID impact, though temporary, there were demand impact, but overall, as we told, 3 million ton LNG import has increased. Down the line, you would see the April prices has come below $6, and it is in the range of $5-$6. And it is expected the spot prices will remain low, and Indian market to be whatever, temporary reduction in service cargo. This is going to go up manifold, knowing the LNG outlook, and in coming few months, the market is again going to be a glut market.
Okay. Thank you. Thanks a lot.
Thank you.
So, Probal Sen, your line is unmuted. Okay, there's some issue with this line. Maybe Vivekanand Subbaraman, can you unmute his line, please?
Yeah. Hi, I hope I'm audible. My two questions are, one, on the new opportunities that are emerging in the usage of LNG as a transport fuel. Can you give us an update on the tie-up with OMCs, OEMs, to set up fuel stations and possibly with fleet owners for adoption of LNG as a trucking fuel? So that's one. Secondly, thank you for the clarification on the inventory gain and trading gains on spot volumes. Apart from this, what was there any other one-off in the results reported numbers this quarter?
So first question is regarding this, LNG transport sector. I would like to convey you that we have tied up with Gujarat Gas for setting up five LNG stations. This is basically on Delhi-Mumbai highway. We are already in the process of buying LNG dispensing station, and perhaps that order will be placed very shortly. We will be ordering almost two right now and three later. Five LNG dispensers will be bought and are to be put up along with GSPC with Gujarat Gas. This is first part. Secondly, we have also entered MOU with IOCL for setting up four LNG station in Southern India. Apart from that, we have also signed an MOU with IGL for one LNG station and with Sabarmati Gas, one LNG station.
Also, one LNG station we are likely to set up at the request of KSRTC, Kerala State Road Transport Corporation. So this is how we are planning almost 8-10 stations in collaboration with others. So, in future also, we have planned to set up more stations as we have planned to have almost 3 stations on this space like that we are planning. So maybe in first phase, in next time, maybe next year, we'll see that more and more LNG stations are coming up. And the LNG consumption in this particular sector, transport sector, is likely to be in the range of almost 7-8 MMTPA in time to come. So this is a very untapped, you can say, business area which has not been seen earlier by anybody.
After reduction of diesel, we can utilize LNG, which will be helping in their saving also, as well as also helping in environmental issues which are being addressed through usage of this LNG. So this is how we perceive. Perhaps another area which is coming up is mining sector also, because lot of equipment are there, which are using huge quantum of diesel. So there is a thought process to use LNG in mining sector also for utilization is various, various equipment used there in mining sector. So this is another area where directly can be used. We are working on that also. So this is how we are planning to enhance the consumption of LNG transport sector, and perhaps other companies are also having their own LNG station.
So we will have, along with ONGC also, and maybe in future we may go on our own also, if required.
Right. Sir, just another follow-up on this regard, in this matter. So when you set up the LNG unloading station in Dahej, does the existing 17.5 MMTPA capacity get utilized, or is it additional infrastructure, so the capacity of the regas terminal is not like a bottleneck for this?
Let me tell you, the infrastructure capacity at Dahej is not a constraint. Right now, we already have 17.5 MMTPA, and this is LNG. So we don't have jetty constraint, we don't have LNG tank constraint, and we have 4 loading bays. So this is absolutely over and above 17.5. Whatever numbers come, that will be over and above that. Is it okay?
Yes. Thank you. And what about my second question, which was on any other one-offs apart from the inventory and trading gains in the results?
No, there was no other one-off. Basically-
Okay, thank you.
The Ind AS impact is there. That was there in the last quarter; we had told you that INR 77 crore of gain was there. This quarter also, there is a gain of INR 30 crore, but then quarter-on-quarter it is a reduction of INR 47 crore. So that is in the other income impact. Apart from that, there is no other one-off.
Okay. Thank you.
Ladies and gentlemen, we have a request. I request you to restrict questions per participant to one, so that, you know, we can take maximum number of participants to ask their questions. As such, we are running out of time. So next, just unmute line of Amit Rustagi, please.
Yeah, thanks, Harsh. Good afternoon, sir, and good afternoon, everyone. My question relates to what is the, you know, update on the expansion plan? S o this 5 million ton terminal, what are the timelines and what could be considered as a zero date, for this new terminal?
So basically, you are talking about East Coast terminal, I think.
Yeah, yeah, East Coast terminal.
Basically, if you look at that point, I can just only say right now that we are at the stage where we are just thinking of and looking at the demand perception over there, because there has been a development over there also, because if you look at the gas find in KG Basin has been there almost 35 by Reliance. So it is the same reason where we are planning to have a terminal over there. So we are working on demand perception and also on this capacity booking contracts. So we need to have at least 30%-40% booking of the terminal capacity before we undertake this decision of constructing a new terminal. So all those things are being worked out. We are in discussion.
Perhaps this pipeline is also under construction by GAIL, this Jagdishpur-Haldia-Bokaro-Dhamra pipeline. So that terminal will be located near that pipeline only, and there is a pipeline which GAIL is likely to lay, which is being laid, I think it has been awarded also, Angul-Srikakulam pipeline. So that is very much near to that particular place, if we look at. And perhaps all those things will be looked into, then we will arrive at a decision on that. But right now, we can say that we want to have one terminal on the east coast, which all we started now, which will take six months, two, three months in just estimating all those things. And thereafter, taking it to the board and then after getting approval, thereafter facing the EPC contractor and the consultant. So this will take some time.
I think we can assume it's a four-year time from now.
Sure. And sir, my second question relates to just quickly, can you remind us the inventory gain number in this quarter? I missed that number.
It's INR 60 crore. Sixty crore this quarter. Inventory gain is INR 60 crore.
Okay. Okay, sir. Thank you. Thanks a lot, and best of luck.
Next, just please unmute line of Sabri Hazarika. Thanks.
Hello, am I audible?
Yeah, Sabri.
Yeah. Thanks, Harsha. So I just have a few housekeeping questions. One of them is this regasification service income for Q3.
Regasification service income, Q3?
Yeah.
So that would be... Yeah, it's INR 607 crore.
Okay.
INR 678 crore in the previous quarter.
INR 678 crore in Q3?
8 was in the previous quarter, 607 is the current quarter.
607 is the current quarter. Okay. And secondly, how much was cargo volumes in Dahej terminal?
Almost six cargoes have come in this year so far, this quarter.
So TBTU, it would be how much, around seven?
TBTU, 8.60, 11 TBTU, we are processing Dahej in current quarter.
11 TBTU. Okay, sir, and lastly, on this index impact, you said around INR 30 crore was the foreign exchange gain. What about other components in raw material, other expense, interest and depreciation?
Those are those would remain flat as per the previous quarters.
Okay.
There would be certain changes. You want to know the entire index impact?
I mean, last quarter, the raw material was around INR 101 crore. So against that, how much would be in Q3?
INR 112 crore. The impact is INR 112 crore, I mean, because of the COGS, the positive in the EBITDA.
INR 112 crore, right? And in other expenditure was, it was around INR 8 crore. So against that, how much it will be?
So, same. So, yeah, it's INR 9 crore in the other expenditure.
What about depreciation and interest? INR 87 crore and INR 81 crore, you, you said last quarter.
Yeah, it's 84 and 78.
84 and 78. Thank you so much.
Work flat, yeah.
Yeah. Thank you.
Can we take Nitin Tiwari, please, next?
Good afternoon. Am I audible?
Yes, Nitin.
Yeah. Thank you for giving me the opportunity. My question is on the LNG transport again. So just wanted to understand that what would be the evacuation mechanism for LNG that we will be bringing in for transport services? So of course, if my understanding is right, it won't be routed through your tank and regasification, right? It will be directly be transported. So what would be the evacuation mechanism? And would jetty capacity be a constraint in terms of how many cargos can you bring in?
See, it's not like this. You look at, as he has rightly said, that the LNG volume capacity is already available with our tanks and our jetty is there, two jetties are there in Dahej. So that's not a constraint. And if you look at the supply of LNG part, we have four loading bays available at Dahej and one at Kochi, which, Kochi, we are expanding it to almost three, this loading bays. So through that loading bay, we can supply, LNG to tankers, to various places and wherever this, LNG stations will be located. So this plan has to be worked out, but we are ready for that. And even now, if you look at the supply of gas to LNG tankers, we are still supplying to industry, to these tankers.
So I hope that this can be handled very well whenever these stations will be set up, and we'll be able to supply this through a state as such, and our biggest capacity is only 17.5. But if we have some more cargoes, we can store it in our tanks. We are building two more tanks, so we'll have more flexibility. So, I think LNG is not an issue right now. We are supplying LNG through our terminal, and that capacity is available with us.
And so my second question is around CapEx. So what was our spend for the nine-month plan for the rest of FY 2021 and FY 2022? And in terms of expansion that we are doing at Dahej, how much have we spent?
The CapEx, as we had given you the forecast of CapEx for FY 2021 was INR 348 crore. But, because of this COVID impact, I mean, there was a lot of, I mean, labor availability issue, and also we did not have, I mean, allow labor to come into the plant facilities. So the CapEx is very negligible. It is at INR 65 crore for these nine months, for the nine months. Now, as for the approved budget for FY 2022, the CapEx forecast is INR 531 crore. Out of that, for the tank, the forecast is INR 125 crore for the two tanks at Dahej.
The major ones are like to INR 125 crore for the two tanks at Dahej, and the CPG distribution network, it will be INR 125 crore. There are routine CapEx at Dahej terminal and terminal, which are INR 66 crore and INR 45 crore respectively. For the small scale LNG, it is INR 30 crore. The corporate office building, I mean, the building, whatever is being made, it is INR 70 crore.
I think that's all.
Yeah, these are the major items.
All right, so this is the 531 that you mentioned is for the next year, right? FY 2022.
Yeah.
Thank you so much for taking my question, sir. I'll get back with you.
Can we unmute line of Yogesh Patil?
Hello, am I audible?
Yeah, yeah, Yogesh.
Thanks. Thanks, Harsh. My first question related to spot LNG prices. As the spot LNG prices were at a higher level in the third quarter of FY 21, your margins are also higher on the same. So, sir, earlier you mentioned that higher the spot LNG prices lead to the lower marketing margin. Just wanted to understand this.
No, it is not like that. I mean, marketing will put more light on this. But you see, the higher margin is because every quarter we do some spot volumes. Now, in this quarter, there was a sudden jump from, I mean, within a period of about 2-3 weeks' time, there was a jump from about $9 to even $32. So, that is why whatever normally spot we were doing, we could be able to get some more margins in this period of time. So it was a one-off opportunity, kind of. That's what we can say. Otherwise, the normal spot trading margins are always there. Now, marketing can further...
We don't have anything much to add. As Debabrata explained, it all depends on what opportunity and what point of time we have sold the volumes. So to that extent, we make money. And you referred to last quarter. So last quarter, of course, there were some trading margins on some of the volumes we sold out of our holding inventory. Other than that, there is nothing too much on to add.
Okay, sir. My second question relates to tariffs on the long-term LNG and the regas volumes. Are they same on the both LNG regasification, or is there any one-off component in the long-term volume?
Long-term volumes have been... You see, as the Director has already explained to you, that during this quarter, during the current quarter, due to the spot prices going up, probably more spot volumes could not have been taken by our offtakers. So there could be the long-term volumes could be little higher than the quarter-over-quarter comparison. But as such, long-term volumes are as per the contract and as per the annual program.
Of course, there is a slight gap between the tariff, between the long-term GSQ as we have and the long-term capacity agreements. There is a gap of almost INR 2 between the two. Other than that, there is no gap.
Okay, thanks. Thanks, helpful, sir.
We take the last question, please, for the day, from Manikanta Garre. Can you unmute his line? Yeah, Manikanta, go ahead. Manikanta, you will have to unmute line from your side.
Yeah. Able to hear me now?
Yeah.
Yeah. Thanks, Harsh. Just wanted to ask one question, sir. With respect to the LNG import plans, earlier you have mentioned that, 1 million ton of spot LNG could be imported, versus now you are saying 10-year term LNG contracts are being planned. So this spot LNG plan is now, is put behind?
Spot LNG is not there. We are-
I mean to say 1 million ton on spot LNG linkage basis.
Okay . It's a long-term LNG only, which we are planning. Still, the discussions are going on with the supplier, and of course, we'll come out with a plan that is there. It has not been dispensed with, and we are still continuing with that. And we are in discussion, the term sheets are being exchanged, acts of agreements are also being discussed. All these things are still going on, but we have not finalized on that one MMTPA. So once we finalize it, it will be done, and that, as you very well know, we have expansion plan for this LNG station. So we have ample opportunity to consume that volume in the new area, CBG and LNG industrial sector. So perhaps that is the particular thought process we are having while having this contract for one MMTPA.
And the price it will have, it will be very reasonable. If you look at today's market, then we can certainly say that this kind of contract is unique in the market, and we will get the best of both the things. Means if it is a formula-driven price, we'll get the lowest price. If it is a spot-related price, it will be spot because it is the less of these two, means the least of these two options. So once we have a formula which is going to ending up when TTF is staying constant, or if it is higher, then it is subject to this JKM minus few cents. So it will never cross that JKM minus few cents. It will be almost DES plus India price. So this is a very unique and very revolutionary formula we have done.
We are in discussion, we are hopeful we will work it out, and perhaps, by next quarter, we'll be able to give more updates on that.
Sure, sir. If you can ask one more question here, that 20-22.5 expansion for Dahej terminal, how is that going to be done? Is it via storage tanks again, or what kind of equipment is required, and what could be the CapEx estimate here?
CapEx, as we must have seen, because it's a greenfield project almost, so it's a... CapEx will be in the range of INR 150-400 crores for expansion plan, because we have lot of utilities which are already there, so it is not much. Tanks, of course, right now we have planned to have two more tanks, but for that 20-22, perhaps, tanks will have to see whether there is a space over there to have for the, for the enhancement of the tankage or not. So that is not planned right now. Up to 20 MMTPA, we are thinking right now, and perhaps two tanks will be added in this phase. Thereafter, in second phase, we may take up 20-22.5.
So right now we are targeting only 20 MMTPA, so that is our... that is in our mind. Thereafter, we will again think of how we expand it further to 22.5.
Sure, sir. Thank you so much.
Ladies and gentlemen, for paucity of time, we'll have to take that as the last question. But I'll, you know, take my privileges as a host and squeeze in one question from my side. So can you please elaborate the capital expenditure plan for CBG projects, if at all, any?
Yeah . Actually, if you look at the CBG project, it's... As you all know that we have signed MOU with the Ministry of Petroleum and Natural Gas for constructing 100 CBG plants across the country. And, if you look at our present, scenario in our, approval terms, we have taken approval from the board for five CBG stations, and we have already identified land in, Haryana for three CBG stations. We are likely to just, sign the agreements and then take the land either on ownership basis or on a lease, and then start the construction of CBG plants. So that is already there. Apart from that, for evacuation plan of that plant, we have written to IGL and other, CGD companies to issue LOIs so that we can offload those quantum from these CBG plants.
So this is how we are planning. Right now, we have planned immediate to have at least five CBG stations in Haryana and Punjab, and thereafter we will unfold more and more station, and also seek LOIs from the CBG entities and, and OMCs, so that there is a guaranteed offtake from our CBG plants. So this is how we are going ahead. And the CapEx plan we have talked about for five station, if you look at the CapEx is around INR 35 crore, INR 30 crore. So this is, say, one CBG plant cost. So five will roughly cost around, say, INR 150 crores.
So CapEx is not much, but there are other factors which have to be looked into, like feedstock and then evacuation plan, connectivity with the pipeline, and proximity to the pipeline, nearby pipeline, so that we can supply the gas produced from there. And in these projects, one more product will be there, which is basically has to be sold, is organic manure, which will be coming out after production of this gas. So this is also to be worked out, how we will dispose of that. So that is also a source of income that will be there. But right now we have plans for five immediately, and thereafter we'll plan again, and I'll let you know how we are doing those things.
Sure. And, absolutely last question: Has the 5% tariff increase happened at Dahej, and when is the 5% tariff increase likely at Kochi?
Yeah.
Tariff increase at Kochi is every first April, the same 5% applies.
Dahej has already happened from January first.
What is the tariff now, sir? If you can just remind us?
Dahej is INR 54.3 crore.
Sure. Very helpful. Sir, on behalf of IIFL, I would like to thank the management for giving us an opportunity to host this interactive session. I would also like to thank all the participants who have logged in and asked, you know, interesting questions. In case any of your questions have remained unanswered, please feel free to drop me a line. I will pass it on to the management and have it answered as soon as I can. My email is harsh.dole@iiflcap.com. Thank you very much.
Thank you.
Thank you.
Thank you.
Thank you.
Sir, before we disconnect, I thought, let me just take a snap. Yes, please. Thank you.
Thank you.
Thank you.
Thanks a lot, sir. Thanks.
Thank you.