New Delhi/Mumbai: State-run gas utility GAIL India plans to spend around Rs 7500 crore ($1.3 billion) this financial year on expanding its pipeline network to meet rising demand for gas, it said on Wednesday, as it reported a drop in quarterly profit.
GAIL said fourth-quarter net profit fell 38%, missing analysts’ forecasts, due to an increase in discounts given to state-run refining companies to compensate for a shortfall from government-set retail prices of cooking gas.
The planned capital spending for the current financial year is roughly similar to 2011-12 and will be funded by raising Rs 4500 crore through debt.
GAIL will launch a local bond issue of up to Rs 750 crore by next week, and plans to raise another $300 million through external commercial borrowings, chairman BC Tripathi told reporters.
A growing number of power plants, industries, and city gas projects have pushed up natural gas demand in Asia’s third largest economy, but problems at Reliance Industries’s gas blocks, off India’s east coast, have forced higher imports of expensive liquefied natural gas (LNG).
To cater for the rising demand, GAIL is adding 5,500 kilometres of pipelines to its existing 9,000 kms network.
The company, which is gradually branching out from its primarily gas transmission business into a major petrochemicals and LNG player, has outlined plans to spend nearly $5.5 billion on capacity expansion over the next four years.
GAIL plans to import around 30 spot cargoes of LNG, Tripathi said.
Q4 profit sharply down
GAIL reported net profit of Rs 483 crore for its fiscal fourth quarter ended 31 March, down from Rs 783 crore a year earlier. Net sales, however, rose 17% to Rs 10454 crore.
Analysts, on average, had expected a net profit of Rs 880 crore, according to Thomson Reuters I/B/E/S.
GAIL provided discounts of Rs 1398b crore during the quarter, compared to Rs 901 crore a year earlier.
India caps prices of petroleum products such as diesel, cooking gas and kerosene and producers such as ONGC and GAIL share the cost of subsidising refineries by selling oil and gas to them at a discount.
Indian state oil companies last week raised retail gasoline prices by Rs 7.54/litre, but the government, faced with street protests, is yet to take a decision on diesel, cooking gas and kerosene.
Shares in GAIL, valued by the market at $7.6 billion, closed 1.4% lower at Rs 325.20 ahead of the results in a weak Mumbai market. The stock is down 15% so far in 2012, sharply underperforming a 5.5% rise in the main stock index