Petronet LNG yet to recover Rs 1,265 crore of ‘use or pay’ charges from its customers

economictimes.indiatimes.com:

Petronet LNG is yet to recover Rs 1,265 crore of ‘use or pay’ charges from its customers, and is trying to find some ‘amicable solution’, its managing director has said. “The company has booked income towards "use or pay charges" of Rs 848.92 crores and Rs 415.91 crores in the financial year 2022-23 (for calendar year 2022) and financial year 2021-22 (for calendar year 2021) respectively on account of lower capacity utilization by its customers. The balance confirmation/ payment against the same is yet to be received,” the auditors flagged in the earnings statement.Petronet LNG is pursuing the matter with customers and is hopeful of a solution, managing director A K Singh said, adding that customers will be able to pay the charges once their businesses stabilize.

Covid, the Russia-Ukraine war and the extreme volatility in the global gas market sharply cut LNG demand in the country and made it hard for customers to pay ‘use or pay’ charges, Singh said. Contractually, customers are obliged to pay for the capacity they book at Petronet’s regasification terminal even if they can’t use it. “We are working out some solutions.

Sometimes if you default in a particular year, you say that next year I will compensate for that. The contract doesn’t allow for that. But this is the expectation from offtakers.

Which may not be totally off-track,” he said. Petronet LNG reported a 13% year-on-year rise in April-June profit at Rs 790 crore as domestic LNG demand picked up and its regasification terminal utilization increased. Revenue from operations fell 18% to Rs 11,656 crore.