Below is an edited transcript of the interview on CNBC-TV18
Q: The question everyone wants to know now is about Kochi terminal. How are things progressing over there and what kind of value addition could come through once this expansion is through?
A: Kochi terminal is commissioned now. The ship that started offloading cargo LNG on August 21 has offloaded and has left Kochi LNG terminal this morning. It has been a successful and fairly business-like working there as far as commissioning is concerned.
We have plans to start commercial sales of gas from today onwards. The gas would be supplied to the Kochi refineries of Bharat Petroleum and also the Fertilisers and Chemicals Travancore (FACT) besides to smaller consumers there. We hope that the gas supply would start from today. The entire commissioning and sales has been completed in a record time of less than 10 days.
Q: What will be the margins to begin with and in terms of profitability?
A: Our business model is basically on the re-gasification services. We charge for regasification and supply. Kochi has two concerns. 1) The larger consumer base is yet to be connected to the Kochi terminal. It is the pipeline phase II, which would connect Kochi to Mangalore, and also a side bifurcation of the same pipeline via Tamil Nadu to Bangalore. They would touch about three-four major cities in Tamil Nadu as well.
The phase II, which would add on the large consuming centers, is yet to be commissioned. It might be delayed as much as one year. Therefore, we have constraint to supply to the first phase consumers, which would mean that we would be operating the terminal at less than 10 percent capacity. That is a concern.
Q: In the previous quarter, your marketing margins were lower on a sequential basis because of lower industrial demand. How is it shaping up this quarter?
A: As far as margins are concerned, there is a very small effect on Petronet's bottomline because almost 85-90 percent is on re-gasification charges only, which are steady. There is no question on that; margin comes on about 10-12 percent of the spot cargos that we buy and sell it.
We see that there is definitely sluggishness in terms of the growth of the gas consumption in the country but we have operated last couple of months over 100 percent capacities. So, I do not think there is any issue as far as our bottomline is concerned. As far as Kochi is concerned, our first concern is to ramp it up and start regasifying, supplying more gas. We can look at the margins little later at Kochi.
Q: Petronet has disappointed the market for the last two quarters. Going forward, can you assure the investors that maybe from this quarter onwards the performance would look up?
A: In the last quarters we have operated the Dahej terminal over 100 percent capacity. So, as far as our supplies are concerned they have been pretty much over capacity situation there. So, we do not see any issue on that. There is a variation in terms of the spot cargos that we bought in and sold. That varies depending upon the slots that we give to other suppliers as well.
So, I do not think the fundamentals of the company, the operations are very much the same; we are quite upbeat about our capacity utilisation. There maybe other factors other than our operations and I see that that the major apprehension of the investor about the Kochi and about the linkage of the phase two pipeline, which is a matter of time and next year it should come back to fairly high degree of level of capacity utilisation.
Q: Could you give us an update on Dabhol terminal as well?
A: We are not aware about what is happening but during the monsoon period the terminal Dabhol cannot be operated because they do not have breakwater and other concerns on that. So, they will have to operate limited to the fair weather window and also the consumption issue because there is pipeline connectivity but they need to perhaps connect more.
Prime Minister Manmohan Singh headed Cabinet Committee on Investments (CCI) on Monday is expected to take up environment and forest clearance issues related to nearly Rs 50,000 crore of power projects.
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