Petronet LNG Limited , India's largest liquefied natural gas importer, has received a significant boost to its expansion plans while facing challenges in its quarterly financial performance.

Major Project Approval

The Board of Directors of Petronet LNG has granted in-principle approval for an ambitious project valued at ₹6,354.80 crore (including taxes and duties). This project involves setting up a 5 Million Metric Tonnes Per Annum (MMTPA) land-based LNG Terminal at Gopalpur, Odisha. The decision marks a strategic shift from the earlier plan of a 4 MMTPA Floating Storage and Regasification Unit (FSRU) based terminal.

Key details of the project include:

• Capacity: 5 MMTPA land-based LNG Terminal
• Location: Gopalpur Port, Ganjam District, Odisha
• Estimated completion time: Approximately 3 years
• Financing: Through debt and equity

This expansion represents Petronet LNG's first greenfield LNG terminal on India's East coast, signifying a major step in enhancing the country's LNG infrastructure.

Q1 Financial Performance

Despite the positive development in its expansion plans, Petronet LNG faced headwinds in its financial performance for the quarter ended June 30:

The company witnessed a year-on-year decline in both revenue and profitability. Revenue from operations decreased by 11.44% compared to the same quarter last year, while net profit saw a more significant drop of 25.49%.

Operational Challenges

Petronet LNG reported decreased LNG demand during the period, attributed to lower power plant usage and fertilizer plant maintenance shutdowns. However, the company noted that long-term LNG prices are currently more favorable compared to spot rates, which could potentially impact future demand patterns.

Ongoing Projects

In addition to the newly approved Gopalpur terminal, Petronet LNG is progressing with the expansion of its Dahej LNG terminal. The project aims to increase the terminal's capacity to 22.5 MTPA and is expected to be completed by October.

'Use or Pay' Dues

The company is addressing the issue of significant 'Use or Pay' (UoP) dues, which stood at ₹1,421.56 crore (gross) as of June 30. These dues have accumulated due to lower capacity utilization by customers under long-term regasification agreements. Petronet LNG has implemented recovery mechanisms and obtained bank guarantees from some customers to secure these dues.

As a prudent measure, the company has made a time-based provision of ₹607.55 crore against these dues, resulting in a net receivable amount of ₹814.01 crore.

Despite the challenges faced in the quarter, Petronet LNG's strategic expansion and efforts to recover dues demonstrate its commitment to strengthening its position in India's growing LNG market. The company's focus on expanding infrastructure and addressing operational issues will be crucial in navigating the evolving energy landscape.

Petronet LNG Limited , India's leading liquefied natural gas importer, has announced its financial results for the first quarter, revealing a mixed performance amid ongoing challenges in capacity utilization.

Financial Highlights

For the quarter ended June 30, Petronet LNG reported:

• Revenue from operations: Rs. 11,879.86 crore
• Standalone profit after tax: Rs. 850.58 crore
• Consolidated profit after tax: Rs. 841.88 crore

Capacity Utilization Challenges

The company continues to face issues related to lower capacity utilization by customers under long-term regasification agreements. As of June 30, Petronet LNG's trade receivables include significant 'Use or Pay' (UoP) dues:

The company has made a time-based provision of Rs. 607.55 crore, resulting in net UoP dues of Rs. 814.01 crore.

Recovery Mechanisms

Petronet LNG has implemented recovery mechanisms for these dues:

• For CY 2022 dues: The Board approved a recovery mechanism, and the company has obtained bank guarantees from customers.
• For CY 2023 dues: A recovery mechanism was approved on January 27, and implementation is in progress with some customers providing bank guarantees.

Expansion Plans

In a significant development, Petronet LNG's Board of Directors has approved an additional investment for expanding its LNG terminal capacity at Gopalpur, Odisha:

• Previous plan: 4 MMTPA Floating Storage and Regasification Unit (FSRU) based LNG terminal
• New plan: 5 MMTPA land-based LNG Terminal
• Incremental project cost: Rs. 4,048.80 crore
• Total approved project value: Rs. 6,354.80 crore (including taxes and duties)
• Expected completion time: Approximately 3 years

This expansion marks Petronet LNG's first greenfield LNG terminal on India's East coast.

Corporate Governance

The company has recommended the appointment of M/s Akhil Rohtagi & Company as Secretarial Auditors for a five-year term, subject to shareholder approval.

Despite the challenges in capacity utilization, Petronet LNG remains focused on expanding its infrastructure and implementing measures to recover outstanding dues. The company's strategic investments in new terminals, particularly on the East coast, indicate its commitment to strengthening India's LNG import capabilities.