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GAIL to float JV with BPCL, diversify into power, expand capacities

The state-owned Gas Authority of India Limited has finalised plans to expand supply of natural gas through pipes in the capital shortly and has proposed to form a Rs 1.4 billion joint venture company for the purpose, chairman C R Prasad said in New Delhi today.

Indraprastha Gas Limited is to be set up in collaboration with the Bharat Petroleum Corporation Limited. GAIL has already connected about one thousand houses with piped gas supply in New Delhi.

The new company will supply natural gas to domestic, commercial and transport sectors, he said.

The Mahanagar Gas Limited, the company's joint venture with the British Gas, is currently supplying gas to around 10,000 houses and seven thousand vehicles in Bombay, he said.

Prasad also announced that GAIL proposed to invest a sum of around Rs 50 billion in developing and strengthening cross-country infrastructure, besides diversifying into the power sector and laying of liquified petroleum gas line from Kandla to Loni, near Delhi, in the next three years.

GAIL has initiated plans for doubling the capacity of Hazira-Bijaipur-Jagdishpur gas pipeline to about 60 million cubic metres a day through a low-cost option of constructing another parallel line along the Hazira-Bijapur stretch.

The pipeline to cater to the energy requirement of power and fertiliser plants in northern India has already been increased from 18.2 to 33.4 million cubic metres gas per day last year. The completion of this upgradation project has enabled the company to transport an additional 45 per cent gas compared to the volume during the previous year.

GAIL is all set to increase its capacity to one million tonnes a year by the turn of the century with the commissioning of four more LPG bottling plants, in various parts of the country.

The government has approved the laying of the 1,230 kilometre pipeline from transportation of LPG from Kandla to Loni to transport 2.5 million tonnes of LPG at a cost of Rs 12.30 billion in two phases.

The project is likely to be commissioned by April 2001 and has secured $ 150 million loan from the Asian Development Bank. The company is also planning to lay LPG pipelines from Visakhapatnam and Secunderabad in Andhra Pradesh.

GAIL has submitted a preliminary proposal to the Delhi government jointly with Bombay Suburban Electric Supply for setting up a 500 mega-watt power plan to help the national capital overcome its acute power shortage.

It has also formed a consortium with Brown & Root, Shell and Cairn Energy for developing a project for gas imports from Myanmar and Bangladesh. Gas supplies from these countries is likely. In any case, the engineering plans should be in place once the nod for supplies was received from these countries.

This project has been floated as import projects from west Asia are not moving owning to both technical and political compulsions. Both Oman-India and Iran-India gas pipeline projects have been shelved.

GAIL has decided to disinvest 25 per cent of its equity soon. The actual date of selling shares will be fixed after consulting the government core committee.

The company's shares will be sold through global depository receipts and the domestic route as well as private placement to financial institutions.

GAIL planned last year to sell shares in the international market but was forced to defer the issue because of a crash in international stock market in October 1997.

Meanwhile, the company reported substantial increase in the sales and profits during the last financial year and declared a dividend of 20 per cent as against 15 per cent in the previous year.

Company sales increased to Rs 57.36 billion in 1997-98 as against Rs 45.41 billion in 1996-97. Profits after tax jumped to Rs 10.2 billion from Rs 6.2 billion the previous year.

The company expected to increase its turnover to over Rs 70 billion in the current financial while profits might be at the same level of last year. The reason for maintaining the profit in spite of sharp increase in turnover, was decline in the marketing margin by Rs 4 billion, received from the gas pool account in the current year against receipts in the previous year.

GAIL has also signed an agreement with National Security Depository Limited to facilitate shareholders to trade in the shares of the company in the dematerialised form.

The earning per share of the company recorded a rise of over 70 per cent to Rs 12 from Rs 7 in the previous year.

UNI