The Hindu Business Line : Subsidy sharing won't hit GAIL Q1 profit

GAIL (India) Ltd today said that its profitability would not be adversely impacted in the current fiscal on account of the subsidy-sharing burden. GAIL's subsidy share during the first quarter of the year will be to the tune of only Rs 153 crore, against Rs 221 crore during the same period last year.

This is as per the recent Government directive to share the total under-recoveries of Rs 6,514 crore for the first quarter on the petroleum products of oil marketing companies. The Government has, however, not disclosed the break up of how much the companies are paying for the four petroleum products - diesel, petrol, LPG and kerosene.

According to information from the Ministry, ONGC, GAIL, and Oil India Ltd (OIL) will pay Rs 3,249 crore to the oil marketing firms to partly cover the losses they made in April-June on selling petrol, diesel, LPG, and kerosene below cost. ONGC will pay Rs 2,876 crore and OIL Rs 220 crore to cover one-third of the about Rs 9,800 crore revenue loss IOC, BPCL, and HPCL suffered on selling fuel in the first quarter. Of the Rs 3,249-crore contribution by upstream firms, IOC would get around Rs 1,625 crore, while BPCL and HPCL would get about Rs 810 crore each.

The subsidy burden on GAIL is likely to be offset by additional revenues expected from the increase in petrochemical production, elimination of LPG and kerosene subsidy from second quarter of the current fiscal, marketing margin on supply of RLNG, and increased prices of LPG and other liquid hydrocarbons, the company said. From the second quarter it is expected that GAIL will not be required to share the under-recoveries, as per the revised natural gas pricing mechanism, which came into effect from July 1, it added.

GAIL will be paying market-driven price for its raw material - natural gas - for manufacturing LPG.

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