Petronet LNG today reported 58 per cent jump in its June quarter net profit on tax reversal even as it imported 32 per cent less liquefied natural gas (LNG) under a costly long-term deal with Qatar.
The company's net profit stood at Rs 247.50 crore in the April-June quarter as compared to Rs 156.60 crore net profit in the same period a year ago, Petronet Director (Finance) R K Garg told reporters here.
He said the net profit was higher because of a Rs 72.37 crore reversal of tax after the company won its case for tax holiday for port services.
Under Income Tax Act, port and power plants are eligible for a holiday or exemption from payment of income tax on income in any 10 years of the first 15 years of operations.
Petronet, which operates at LNG import port at Dahej in Gujarat, decided to avail of the tax benefit for the port operations in last 10 years of the 15 year period. "Income Tax department had objected to it and we have now received a favourable ruling," he said.
The 10 million tonnes Dahej LNG import terminal operated at 98.6 per cent of the capacity while its 5 million tonnes Kochi terminal in Kerala operated at just 6 per cent because of lack of pipeline to take gas to customers.
Garg said Petronet's LNG buyers -- state-owned energy firms GAIL, IOC and BPCL -- took only 68 per cent of volumes under a long-term 7.5 million tonnes a year import contract with RasGas of Qatar.
This was because the landed price of RasGas LNG in India was about USD 12.5 per million British thermal unit as compared to the same gas being available from spot or current market at less than USD 8.
This led to Petronet buying an equivalent amount of lesser volume from RasGas, Garg said.
Petronet buys LNG from RasGas on a take-or-pay contract - which essentially means that the company has to pay for 7.5 million tonnes of LNG every year even if it does not take all or some of it.
The company in-turn has a similar take-or-pay contract with its off-takers - IOC, BPCL and GAIL.
"The take-or-pay obligations, if any, would be determined after the close of calendar year as per the contractual provisions under the long-term contracts which are materially back to back," he said, implying that if Petronet had to pay RasGas any money for LNG not bought, it will charge the same from its offtakers.
He refused to hazard a guess if the lower purchase from Qatar could lead to RasGas dragging it to an international arbitration.
"Anything is possible. In any contract, anything is possible. We are not in that stage that anything of that nature is there," he said when asked if an arbitration is a possibility.
