Speaking to CNBC-TV18, RK Garg Director-Finance, Petronet LNG, said its Dahej terminal saw the highest capacity utilisation for the FY16. Petronet LNG is promoted by state-owned firms GAIL, Oil and Natural Gas Corp, Indian Oil Corp and Bharat Petroleum Corp. It operates a 10-million-tonne-a-year LNG import terminal at Dahej in Gujarat and a 5-million-tonne-a-year terminal at Kochi in Kerala. Its customers include IOC, BPCL, GAIL (India) and GSPC. India’s largest natural gas importer has a purchase agreement with Qatar’s RasGas. Volume growth in Q4 was around 2.9 million tonnes. Garg is hopeful that Dahej terminal will continue to supply at its current utilisation capacity of 120 percent going forward. Only Dahej and Hazira terminals would be operating for 6 months, he said. Currently, Petronet LNG’s Dabhol terminal is underutilised while the Kochi terminal lacks proper pipeline capacity. The Kochi terminal is underutilised, he admitted, saying all would depend on customers. Below is the verbatim transcript of RK Garg’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Improvement in volumes if I heard the Managing Director right in the press conference, he said 9 percent improvement in volumes. Can you give us the actual amount of volume that you could process and what does FY17 look like? A: Last year has been a little difficult for Petronet LNG as you know because of the long-term contract and we were facing a problem in the market. Finally we concluded that deal sometime in December 2015. However, during this period what we have done, that we have started importing the spot volume as well as providing our regas capacity so as to maintain the full utilisation of the Dahej terminal. Dahej terminal overall has operated around 111 percent of the nameplate capacity and which is highest ever throughput achieved at Dahej as compared to the previous years. Same thing has happened during the last quarter. Last quarter the throughput has been the highest ever which was around 117-118 percent of the nameplate capacity. So, overall, performance during the last year as well as the last quarter has been quite good. Sonia: Can you tell us what the absolute growth in volumes could be like over the next six months because in Q4 if I am not wrong you have done volumes of 2.9 million tonne which is a growth of 60 percent year-on-year (YoY). What could the growth be over the next six months? A: Next six months, in the country we have only two LNG terminals operating, Dahej terminal and one is Hazira. As you know that we have an issue with Dabhol terminals which Gas Authority of India (GAIL) operates during this period, and there would be definitely higher utilisation of Dahej terminal but there is a limitation up to which we can go. So, currently we are operating around 120 percent of the capacity and we expect that should continue over the next six months as well. Latha: What are you picking on Dabhol though; they were going to demerge their regasification unit, is that likely to start functioning any time now? A: Dabhol, they are having an issue with respect to breakwater and they didn’t have breakwater. After April onwards they stopped operating that facility and again they came back some time in October. So, during this period we will be having the limitation of capacity in the country. Latha: Tell us about Kochi, we again heard a little bit from your Managing Director, he said that you are liaising with GAIL and some bids have been given out. Just tell us what is the capacity utilisation we can expect and by when? A: The capacity utilization is very limited as of now at Kochi. Only the fillip side is that the one major fertiliser unit which were not off taking LNG earlier, they have started off taking from this month onwards. So, we will be having two major consumer as of now, one is Kochi Refinery and other is Fertilisers and Chemicals Travancore Limited (FACT) , so they are off taking LNG. We expect that should continue going forward. However, all depends of Kochi utilisation is connectivity and connectivity to other markets which is basically in Karnataka and Kerala and via Tamil Nadu, all these two pipelines which are stranded as of now. There are a lot of efforts going on, GAIL along with other agencies and Petronet is also participating with them to make sure that pipelines are laid as quickly as possible. Latha: What is your own estimate, will they be laid at all or is the political opposition still very strong? A: State government is supporting for building this pipeline and all activities are on, including even award of tender which was earlier stopped. So, we are quite hopeful that activity would accelerate for these pipelines. Sonia: Can you tell us what is the impact that higher contract volumes has on the marketing and the trading gains for the company because of the higher costs that you might have to incur for internal consumption? A: As far as the regas terminal, if we have an output more and our margins are increased more because the fixed cost is already taken care of. So, that is an advantage in the LNG terminal. During this period because of our own spot volume as well as the long-term we definitely have some trading margins in the profitability but the major profitability comes on the utilisation of LNG terminal. Sonia: What were exactly the marketing margins this time, I understand that they would be subdued but what were the exactly and what is the expectation going ahead? A: The market margin very difficult to share with you exact numbers and one can always analysis the profitability and work out. Only the thing is that the market is good, demand is right and we are operating the terminal well and wherever there is an opportunity and market pays that kind of margin and we are always a part of the bidding process, we bid for it and get that profit based on those margins. So, it is not an exact any agreed margin but it depends up on the market. Latha: When do you think a terminal will come in the eastern sea board, there was one that Indian Oil Corporation (IOC) was planning? A: IOC is already constructing one terminal in Tamil Nadu. As far as our information, they are going ahead and maybe ready some time in 2018 or 2019; I am not exactly sure what is the progress as of now. However, there are other terminals in the eastern side being discussed but still the construction activity is not there as of now.