Underutilised Kochi Facility Eats Into Petronet LNG Bottomline, PAT Tumbles 58%

Higher depreciation rates and interest charges on new Kochi terminal has played havoc for Petronet LNG during third quarter. Company’s bottom line has tumbled to Rs 136 crore during Q3 FY14 as against Rs 319 crore earned during corresponding period last year, showing a decline of whooping 58%. Also due to decline in rupee against the dollar and increase in the contracted price of LNG under long term LNG SPA has pushed the topline by 11% to Rs 9382 crore despite drop in the volume. If company’s management has to be believed, company is incurring Rs 104 crore quarterly on new Kochi terminal which is running at just 5% of its capacity, owing to interest cost and depreciation. 

As far as capacity utilisation is concerned company has operated on 95% of its capacity at Dahej Terminal of 10 MMTPA as volume re-gasified reached to 124 TBTUs as against 140 TBTUs processed during last year period. 

“As the cost of LNG has increased, demand has subdued among its main consumers like fertilizer and industrial sector and it is coming down on a sustainable manner but situation may improve as we expect some softening in the prices,” said A K Balyan, MD Concor. Company management is of the view that for situation to change it is really necessary that some softening in the LNG prices in the international markets coupled with further consolidation in rupee should happen. 

Also as company’s 5 MMTPA Kochi LNG terminal is underutilised due to lack of pipeline infrastructure, company management is deliberating upon plan B for this capacity. “We are planning to give this facility to some vendor for using this terminal for storage purpose for some time, till pipe infrastructure comes up for the facility,” informed Balyan. By doing so, company can use up to 25-30% of the capacity. 

Further work on Company’s third LNG terminal proposed at Gangavaram in Andhra Pradesh is progressing satisfactorily as Ministry of Environment & Forests, Government of India, is expected to take up the Company’s proposal for award of environment clearance for the project soon. Company will soon shortlist potential EPC bidders for the LNG Storage Tanks, re-gasification and Marine portions of the project. Also keeping in mind the growing demand of natural gas in India, company is working on the expansion of Dahej terminal to 15 MMTPA and Board of Directors has now approved the award of EPC contract for expansion of re-gasification facility and it is expected that the capacity expansion to 15 million tons will be complete by the end of 2016.