The Hindu Business Line : GAIL plans Rs 2,744 cr capex for 2007-08

Plans ahead
Of the Rs 2,744-crore investment, Rs 1,855 crore is for pipeline projects, Rs 500 crore for E&P projects, Rs 146 crore for petrochemicals, Rs 94 crore for business development.
The company plans to raise Rs 2,500 crore in the current financial year.

EXPANSION PLANS: Mr U.D. Choubey (left), Chairman, GAIL (India), and Mr R.K. Goel, Director Finance, announcing the company's financial results at a press conference in the Capital on Wednesday. GAIL plans to invest about Rs 25,000 crore in laying new pipelines and expanding petrochemical business during the next five years, a part of which may be raised through sale of its stake in ONGC. - Kamal Narang

New Delhi May 9 GAIL (India) Ltd has chalked out a capital expenditure plan of Rs 2,744 crore during the financial year 2007-08. Addressing a press conference on Wednesday after the board meeting on Tuesday, the Chairman and Managing Director, Mr U.D. Choubey, said the investments would be made towards pipeline projects, oil and gas exploration and expansion of petrochemical plant.

Of the Rs 2,744-crore, the company plans to invest Rs 1,855 crore in pipeline projects, Rs 500 crore in E&P projects, Rs 146 crore in petrochemicals, Rs 94 crore in business development, and the rest in projects related to city gas, telecom, and coal gasification.

GAIL is expanding the capacity of its Pata petrochemicals plant in Uttar Pradesh to 410,000 tonnes per annum (TPA) from the current 310,000 TPA. "The project is expected to be completed by the first quarter of the current financial year," he said.

GAIL plans to raise Rs 2,500 crore in the current financial year, of which 60 per cent would in the form of external commercial borrowings.

"We are talking to bankers, and hope to raise the money by the last quarter of 2007-08. The borrowings will be utilised to partly fund our capex in the current financial year and in 2008-09," said the company's Director Finance, Mr R.K. Goel.

GAIL plans a total capital expenditure of Rs 25,000 crore for the next five years (by 2011-12). "Of this, we plan to raise Rs 15,000 crore through borrowings and the remaining Rs 10,000 crore will be through internal accruals," he added.

Sustained performance

The company has recorded a sustained performance in all key physical and financial parameters in the financial year 2006-07, despite being hit by natural calamity and subsidy element. According to the audited figures, turnover for the year went up by 11 per cent to Rs 16,047 crore from Rs 14,459 crore in 2005-06. The profit after tax for the year under review was Rs 2,387 crore against Rs 2,310 crore in the previous year.

According to the company, the PAT was achieved despite 40 per cent increase in subsidy sharing in domestic LPG and PDS kerosene from Rs 1,064 crore in 2005-06 to Rs 1,488 crore in 2006-07, and increased cost of operations owing to the floods, the increased cost of natural gas as feedstock for processing plants and fuel for compressors.

Without the subsidy element, the PBT would have increased by 33 per cent to Rs 4,348 crore and PAT would have increased by 49 per cent to Rs 3, 444 crore.

GAIL may sell its 2.5 per cent stake in ONGC to partly fund its capital expenditure for the current financial year and 2008-09 (April-March). "We hold 2.5 per cent stake in ONGC, which we may sell for fund requirement. This is the best time to offload our stake because of buoyant market conditions. However, we have not set a time frame for stake sale," Mr Goel said.

Dabhol plant

GAIL may import close to 5 million tonnes of liquefied natural gas (LNG) a year by 2012 to supply to Dabhol power plant. GAIL is in talks with Algeria, Australia and suppliers to import LNG on a trial basis to run the country's biggest gas-fired power plant in western India starting in November.

Proposed pipelines

In the financial year 2008-09, the company plans a capital expenditure of Rs 6,000 crore, mainly for gas pipeline projects. The proposed pipelines are Dadri-Bawana-Nangal pipeline, Chainsa-Gurgaon-Jhajjar-Hissar, Jagdishpur-Haldia, Dabhol-Bangalore, and Kochi-Kanjirkkod-Bangalore/Mangalore.

Once these pipelines are commissioned the gas throughput capacity is expected to increase to 280 million cubic metres per day from the current 130 million cubic metres per day, he said.

Gas find

The company seems to found good prospects in block NEC-OSN-97/1 located in offshore Bay of Bengal, 120 km from the on-land base at Haldia. Indications are the company has struck gas in the block. The block is considered to be highly prospective with huge gas potential.

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