GAIL will pump in Rs18,000 crore to double pipeline capacity

GAIL will pump in Rs18,000 crore to double pipeline capacity
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First Published: Sat, Mar 31 2007. 12 48 AM IST
Updated: Sat, Mar 31 2007. 12 48 AM IST
Utpal Bhaskar
New Delhi: GAIL (India) Ltd, the country’s leading gas pipeline infrastructure company, proposes to more than double its pipeline capacity to 12,600km by 2012 riding on an investment of Rs18,000 crore.
According to company estimates, this will enable GAIL to increase its revenues by 190% from the current level of Rs2,000 crore to Rs5,800 crore by 2012.
In the same period, the gas-carrying capacity will be increased by 111% to 280 million standard cubic metres a day (mscmd) of gas from the current levels of 133mscmd. GAIL currently has a pipeline network of 5,600km.
“Even if 80% of this capacity is utilized, our transportation revenue will rise from the present Rs2,000 crore to Rs5,800 crore,” U.D. Choubey, chairman and managing director of GAIL, said.
The proposed pipelines are Dadri-Bawana-Nangal (610km costing Rs2,500 crore), Chainsa-Gurgaon-Jhajjar-Hissar (450km; Rs1,000 crore), Jagdishpur-Haldia (1,450km; Rs5,300 crore), Dabhol-Bangalore (730 km; Rs2,500 crore), and the Kochi-Bangalore pipeline (840 km; Rs2,500 crore).
The company would also increase capacities of the Dahej-Vijaipur, Vijaipur-Dadri and Vijaipur-Auraiya pipelines at an estimated cost of Rs4,200 crore.
“We have already received an approval from the petroleum and natural gas ministry for inviting expressions of interest to build five new natural gas pipelines across the country,” Choubey said.
Ajay Arora of audit firm Ernst & Young welcomed the move with a bit of caution and said, “GAIL is in a postion to tap the gas discoveries made by the new players and make use of the buoyant domestic gas scenario in the country. However, the challenge for GAIL is that it does not have any gas of its own,” he added.
GAIL would invite bids from companies who would like to share the infrastructure facility provided by the pipeline. As per the new gas pipeline policy, 33% of the capacity shall be offered to the companies who want to share this common capacity.
Choubey declined to comment on the way the expansion would be funded, but said that the company will have to tap the market. “We will go to the market as this is a huge investment. However, it is too early to comment on the financials,” he said.
The expansion will be undertaken in two phases. In the first phase, 2,200km of new pipeline network will be completed by 2009 when gas from the Krishna-Godavari basin starts flowing. The rest of the project will be completed by 2012.
GAIL has also decided not to import liquefied natural gas (LNG) from the spot market in 2007-08 and plans to transport the domestic gas discovered by Reliance Industries Ltd (80mscmd), Oil and Natural Gas Corp. (ONGC) and its own future finds. It is also in advanced talks with Algeria for long-term supply of LNG.
The company also plans to separate its gas transportation and marketing business.
“For accounting purpose, the transportation and gas marketing business have been separated,” Choubey said.
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First Published: Sat, Mar 31 2007. 12 48 AM IST
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