The Hindu Business Line : Rupee dip to have mixed impact on gas cos

Kolkata, Oct. 23 Rupee depreciation has left a mixed impact on the gas industry. While producers of dollar denominated non-APM gas witness an unexpected increase in their revenues, city gas distribution (CGD) companies procuring LNG or non-APM gas for price-sensitive retail sales will incur substantial exchange losses.

Transmission agencies are largely neutral to forex movement.

Rupee depreciated by eight per cent from Rs 42.92 to Rs 46.45 a dollar during the July-September quarter. The Indian currency devalued by another 5.4 per cent during the first three weeks of October.

JV route for ONGC

Despite being India’s largest gas producer, ONGC’s own operations will be largely neutral to the exchange rate fluctuations as most of its own production is APM gas sold in rupee terms.

The company, however, will gain on its share of non-APM gas production by joint venture operations, like Panna-Mukta-Tapti (with Reliance and British Gas) and Ravva (with Cairn, Videocon and Marubeni). The PMT joint venture in particular will gain substantially on sale of its daily production of 17 million standard cubic metres (mmscmd).

Marginal negative impact

According to sources, the exchange fluctuation should leave “marginal negative impact” on GSPC. While the company registers gains on its gas equity from Niko-operated Hazira joint venture, GSPC is a net aggregator of natural gas procuring approximately 7 mmscmd from different sources (including spot and contracted LNG) at dollar-denominated price.

While 90 per cent of the gas is sold in dollar terms to bulk customers, GSPC Gas – the wholly owned CGD outfit – selling approximately 1 mmscmd to retail customers in rupee terms will surely feel the heat. CGD industry generally passes on cost-push to bulk customers but fails do so in the retail segment.

Gujarat State Petronet – the group transmission outfit charging transmission fee in rupee terms – is immune to any fluctuation of commodity price or forex movement.

Gujarat Gas

BG India controlled Gujarat Gas procuring close to 3 mmscmd non-APM gas may be hit, as approximately 75 per cent of its sales are in rupee terms. Since the company revises its prices once in a year to instil a sense of stability to its customers, it will absorb the cost-push.

Sources close to the company say that Gujarat Gas is not contemplating any out-of-turn price revision. Margins of Adani Energy running CGD business may also be affected.

The APM gas-based CGD businesses, like the Indraprastha Gas in Delhi and Mahanagar Gas, are neutral to any forex fluctuation.

Sources in GAIL (India), trading approximately 80 mmscmd of natural gas, confirm minor impact that too on the own consumption (at Pata petrochem).

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