New Delhi: State-run gas utility Gail India plans to set up a liquefied natural gas (LNG) trading desk in Singapore to take advantage of the city-state’s favourable tax regime and cater to demand for the fuel in Asia, its chairman B.C. Tripathi said.
Gail owns India’s biggest gas pipeline network of about 8,700 kilometres, with capacity to transmit about 170 million cubic metres of gas daily.
“We believe eastern part of Asia will emerge as a big LNG market.... Singapore offers a favourable tax structure because of India’s tax treaty with Singapore,” Tripathi told reporters on Wednesday after announcing the company’s quarterly earnings.
India has a double taxation avoidance agreement with the island nation.
The utility will finalise its LNG trading desk plan within two to three months, Tripathi said.
“We have a subsidiary in Singapore. Whether to trade LNG through that or float a company there—we are examining all prospects of how it can be done.”
Gail, which has already contracted two overseas LNG cargoes for August, also plans to buy two more in September to meet rising domestic demand, Tripathi said.
It aims to increase its pipeline network to 10,000 kms to transmit 210 million cubic metres of gas daily in the current fiscal year to end-March 2012.
Tripathi said the company’s capex for 2011/12 has been set at Rs 8,270 crore ($1.9 billion), which included a borrowing target of Rs 3,770 crore.
The firm plans to spend Rs 28,641 crore over three years to March 2014 to expand pipeline network and plans to fund it via borrowings of Rs 13,675 crore over the same period, the company had said in May.
Gail has tied up loans for about Rs 1,700 crore and plans to raise about Rs 2,000 crore loan via foreign debt and local bonds in this fiscal year to fund its expansion, Tripathi said.
“For this, we plan to hit (the market) by the end of third quarter.”