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.

Petronet LNG Ltd. , India's leading natural gas importer, is making significant strides to diversify its operations and expand its footprint in the energy sector. The company is currently in the process of securing a substantial loan to fund its ambitious expansion plans.

Massive Fundraising Initiative

Petronet LNG is seeking a loan of at least ₹120.00 billion (approximately $1.40 billion) to finance two major projects:

1. A new petrochemical plant
2. An LNG terminal

This fundraising effort represents one of Petronet's largest to date and is poised to be among the biggest local currency loans in India this year.

Project Details

Petrochemical Complex in Dahej, Gujarat

• Estimated Cost: ₹206.85 billion
• Purpose: To diversify the company's earnings beyond LNG

LNG Import Terminal in Gopalpur, Odisha

• Capacity: 5 million tons
• Type: Land-based

Loan Specifics

• Potential Lenders: Local financial institutions including Axis Bank, State Bank of India (SBI), and Union Bank of India
• Financial Advisor: SBI Capital Markets
• Tenor: Potentially exceeding 10 years
• Pricing: Expected to be lower than SBI's current lending rate of 7.95%

Market Context

This significant loan request comes at a time when bank lending growth in India has slowed to 9.50%. The move by Petronet LNG demonstrates the company's confidence in its expansion strategy and the potential of the petrochemical and LNG sectors in India.

Strategic Implications

By venturing into petrochemicals and expanding its LNG infrastructure, Petronet LNG is positioning itself for long-term growth and resilience in the evolving energy landscape. The diversification into petrochemicals, in particular, marks a strategic shift that could help the company mitigate risks associated with fluctuations in the LNG market.

As Petronet LNG moves forward with these ambitious plans, the energy sector will be watching closely to see how this expansion impacts the company's market position and the broader natural gas and petrochemical industries in India.