GAIL to make waves via expansion, consolidation and diversification

Last Updated: Sun, Nov 14, 2010 20:11 hrs

Plans to increase turnover to Rs 1 lakh crore by 2020 from Rs 24,996 crore.

GAIL India, the state-run gas transmission and marketing company, has charted a new corporate business plan up to 2020. The focus is on consolidation, expansion and diversification.

It plans to consolidate presence in petrochemicals and renewable energy, allocate 15 per cent of annual capital expenditure for exploration and production (E&P), pick up equity in upstream LNG (liquefied natural gas) projects abroad, and pursue investments in shale gas projects in and outside India. Besides, GAIL India is keen to expand its city gas distribution business and undertake distributed generation projects along its pipelines.

B C Tripathi, chairman and managing director of GAIL India, told Business Standard that: "The new corporate business plan, titled ‘Next Wave’, aims at increasing the company’s turnover to Rs 1 lakh crore by 2020 from the current level of Rs 24,996 crore. Our current networth is of the order of Rs 60,000 crore."

The company has no plans for initial public offering, but it would use multiple instruments to mobilise resources to finance its projects. The company plans to spend nearly Rs 1,000 crore annually on E&P, according to him.

"So far, GAIL India has been a minority partner in E&P of 29 blocks. However, in view of the board’s decision to allocate 15 per cent of the annual capex, the company would participate in the ninth round of the New Exploration Licensing Policy."

According to Tripathi, GAIL India plans to commence drilling in its Rajasthan block by January and in Cauvery block by April. "We are in the midst of strengthening of the human resources for E&P."

On renewable energy, Tripathi said GAIL India’s five-megawatt (Mw) wind power project was up and running. "We will set up another wind project of 50 Mw. Besides, the company would participate in the National Solar Mission, with the development of 50 Mw solar thermal power project."

Tripathi said the company proposed to pick up equity in upstream LNG projects in Africa, Indonesia, Malaysia and Australia. "We may be a minor or major stake holder in such projects depending on the cost."

The company is also scouting investment opportunities in India and abroad in shale gas. Investments in shale gas projects would be done alone or through consortium.

GAIL India, either individually or through joint ventures, is engaged in expanding city gas distribution network. It is also investing Rs 27,000 crore by 2013-14 for laying natural gas transmission network.

"By December, the gas transmission capacity would be increased to a level of 350 million standard cubic meters per day (mscmd) from 170 mscmd. The pipeline network would be increased to 12,000 kilometres (km) from 8,000 km," Tripathi said.

The company has a 72 per cent market share in gas transmission and plans to double the existing transportation capacity in the next two to three years.

Along pipelines, it plans to tap opportunities in the development of distributed generated power projects, which would be gas-based and meet the local requirement of power.

Tripathi said: "During 2010-11, GAIL India would raise Rs 6,275 crore through domestic and foreign lenders. Of the $300-million external credit assistance, it has already got $100 million, Rs 1,250 crore from HDFC and Rs 700 crore from Oil Industry Development Board."

He said the company planned to raise Rs 8,000 crore in 2011-12 through domestic, inter-corporate loan and external commercial borrowings.

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