New Delhi: India’s largest gas transmission and marketing company, GAIL (India) Ltd, said third quarter profit more than tripled to Rs860 crore from Rs254 crore owing to a drop in subsidy payouts and an increase in fuel transportation.
The subsidy burden share by GAIL on account of under-recovery, or the revenue loss for government-owned oil marketing firms from selling fuel below cost, decreased by more than half to Rs455 crore in the three months to end-December, from Rs988 crore in the year-ago period.
“This is based on the assumption of the previous quarter. Ultimately, it will be adjusted on a yearly basis,” said B.C. Tripathi, chairman and managing director, GAIL.
Capacity rise: GAIL’s gas terminal in Hazira, Gujarat. GAIL plans a capital expenditure of Rs5,000 crore for the next fiscal.
He added that GAIL wants to partner NTPC Ltd in setting up additional capacity of 2,000MW at the cash-strapped Ratnagiri Gas and Power Pvt. Ltd’s (RGPPL) project in Dabhol, Maharashtra.
Shares of GAIL rose 3.10% to end at Rs438.70 on the Bombay Stock Exchange on Monday, while the benchmark Sensex rose 0.49% to close at 17,641.08 points.
Sales rose 6% to Rs6,188 crore, owing to a 40% revenue increase in its gas transmission business on account of transporting around 25 million standard cu. m per day of gas from Reliance Industries Ltd’s D6 block in the Krishna-Godavari basin.
Tripathi said GAIL couldn’t make a higher profit as its liquid hydrocarbon realization fell from a high of Rs38,000 per tonne to Rs25,000 per tonne.
The firm registered a net profit of Rs2,229 crore for the first nine months of 2009-10, a 2.52% increase over the same period last year.
“The softening of crude oil prices has helped GAIL’s results. We have had sub-$70 per barrel prices for the last two quarters,” said Gokul Chaudhri, partner at audit and consulting firm BMR Advisors.
“The emergence of multiple supply source, both from domestic and imported gas, will affect the market dominance of GAIL, which could result in (the) company ending up only as a transporter,” he added.
As for the Dabhol capacity addition plan, Tripathi said GAIL has approached both the power secretary and the NTPC chairman. “This is a project of both NTPC and GAIL. We want to participate equally with NTPC for the additional capacity,” he said.
Mint had reported on 12 October about NTPC’s plan to set up the additional capacity with an investment of around Rs8,000 crore on its own if GAIL was unwilling to do so.
NTPC and GAIL each own 29.65% of RGPPL. The Maharashtra government has a 15% stake in the project and the balance is owned by state-owned banks and financial institutions.
For the next fiscal, GAIL said it has planned a capital expenditure of Rs5,000 crore. Of this, it plans to raise Rs2,000 crore in overseas convertible bonds, Rs500 crore through domestic borrowing, Rs1,000 crore in term loans from banks and Rs1,500 crore through external commercial borrowings.
Tripathi also said GAIL’s board has approved plans to buy a 4.17% stake in the $2.01 billion (Rs9,185 crore) gas pipeline China is building to transport natural gas found off Myanmar’s coast. ONGC Videsh Ltd, the overseas investment arm of Oil and Natural Gas Corp., plans to buy an 8.35% stake in the pipeline.
PTI contributed to this story.