Former GAIL chairman BC Tripathi joins Essar Oil UK as board member

Former GAIL chairman BC Tripathi has been appointed as chairman for Essar Exploration and Production Mauritius. The executive will also hold a board member position in Essar Oil UK.

“In a move to drive the strategy and growth of its energy investments, Essar Capital (ECL), the investment manager of Essar Global Fund (EGFL), has appointed BC Tripathi as the Non-Executive Chairman of Essar Exploration and Production Mauritius (EEPLM) and Board Member of Essar Oil UK,” the group said in its statement. Before the latest appointment, Tripathi was chairman and managing director at GAIL between August 2009 and July 2019.

Essar in its statement said that Tripathi will drive the investment strategy and play a key role in providing strategic direction to EGFL. "A person of Tripathi’s caliber is an invaluable addition to our leadership team. His exemplary track record in India’s energy sector will help EGFL grow and add significant value to our energy investments globally,” said Prashant Ruia, Director-Essar Capital.

EEPLM, through its subsidiary Essar Oil & Gas Exploration & Production (EOGEPL), is India’s largest operator of unconventional hydrocarbon acreages located across key sedimentary basins in the country.These acreages have a resource base of 15 Trillion Cubic Feet and includes both Coal Bed Methane and shale reserves.

Non-telecom PSUs to take common legal recourse for AGR: GAIL chairman

Gas Authority of India Limited (GAIL) India is in talks with other state-run companies to take a common legal recourse in the controversial adjusted gross revenue (AGR) issue. GAIL is in discussions with Oil India (OIL) and Power Grid Corporation (PGCIL) refgarding this.

Earlier this month, the Supreme Court (SC) directed the transmission major to approach the appropriate forum regarding the issue. The Department of Telecommunication (DoT) had raised a demand of Rs 1.83 trillion from the company towards annual licensing fee, including interest and penalty of AGR.

If the amount has to be paid, it will significantly affect the Rs 1 trillion capital expenditure plan the company has lined up for the next five years. "We are hoping that we will not have to pay the money," said Manoj Jain, chairman and managing director of the company. The companies are yet to decide on the legal options, including approaching the Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT).

Around 50 per cent of the capacity expansion that the company has lined up will involve the transmission business, for which the government is already working on a proposal to come up with a separate subsidiary. "We have lined up investments to the tune of around Rs 1 trillion for the next five years — out of which around Rs 50,000 crore will be on transmission business, Rs 10,000 crore will be going towards the petrochemical business and Rs 40,000 crore for its joint venture expansions," he said. GAIL is looking to double its revenue and increase profits by 1.5 times by 2025.

Jain said that the government is working on a proposal to come up with a 100 per cent subsidiary for transmission and the new entity will be in place within a year "once the Cabinet nod is in place for the same."

GAIL reports 25% drop in Q3 net profit due to slump in marketing margins

State-owned gas utility GAIL India on Monday reported 25 per cent drop in third-quarter net profit due to slump in margins on natural gas marketing as well as LPG and liquid hydrocarbons.

The net profit at Rs 1,250.65 crore, or Rs 2.77 a share, in October-December, was 25.6 per cent lower than Rs 1,681.23 crore, or Rs 3.73 per share, profit earned in the same period a year ago, the company said in regulatory filings.

Revenues from natural gas marketing fell 9.5 per cent to Rs 14,662.67 crore and segment profits dropped 31 per cent to Rs 466.52 crore. Revenues and profits from its core gas transmission business, however, continued to grow in double digits.

Also, the petrochemical business posted a loss of Rs 8.51 crore as compared to a pre-tax profit of Rs 29.71 crore a year ago.

Gas marketing pulled down the company's overall turnover to Rs 17,768.82 crore in the third quarter from Rs 19,788.98 crore in October-December 2018.

In a statement, GAIL said net profit was up 18 per cent quarter-on-quarter "mainly due to better physical performance, better margins in gas marketing and liquid hydrocarbons."

In the nine-month period ended December 2019, gross sales of Rs 54,021 crore were lower than Rs 56,101 crore in the corresponding period of last year. Net profit dropped 27 per cent to Rs 3,602 crore.

The drop in profit was "mainly due to a reduction in petrochemical and liquid hydrocarbon prices by around 22 per cent and 17 per cent, respectively," the statement said.

GAIL Chairman and MD Ashutosh Karnatak stated that the company had been able to achieve growth in profit in third quarter despite a significant decline in petrochemical prices.

"This has been due to better operational efficiency and physical performance in comparison to Q2 FY20 accompanied by an increased capacity utilisation of the petrochemical unit at Pata," he said.

GAIL, he said, is in step with the government's vision of expanding the share of natural gas to 15 per cent in the energy basket of India by working relentlessly in reshaping the gas economy of the country.

The company declared an interim dividend of 64 per cent or Rs 6.40 per share, for 2019-20.

GAIL to invest over Rs 45,000 cr to create infra for gas-based economy

GAIL India Ltd, the country's largest gas utility, plans to invest over Rs 45,000 crore over the next five years to expand the National Gas Pipeline Grid and city gas distribution network to help push for greater use of environment-friendly fuel, its chairman Ashutosh Karnatak said.

The gas pipelines are planned to take the fuel to the east and northeast regions as well as to consumers in the south as part of the government push to raise the share of natural gas in India's energy basket to 15 per cent by 2030 from the current 6.2 per cent, he said.

GAIL's push for the creation of infrastructure is in line with Prime Minister Narendra Modi's vision of creating a gas-based economy that is less reliant on polluting fuels for meeting its energy needs.

"Before we transition to zero-emission technologies (for both automobiles and factories) say by 2040/2050, natural gas is best suited for tapering emissions from current levels," he said. "Natural gas is 'happy fuel' as it has a fraction of emissions compared to alternate liquid fuels such as diesel in automobiles and coal in power plants."

India currently consumes some 160 million standard cubic meters of gas per day and consumption has to rise to 400 mmscmd to reach 15 per cent share in the energy mix, he said, adding GAIL is playing its responsibility by creating the infrastructure for the same.

GAIL currently operates 12,160-km of pipeline network and markets two-thirds of all-natural gas sold in the country. It is currently executing more than 5,500 kilometers of pipeline projects and a similar length is at the planning stage.

Karnatak said the projects at hand include the ambitious Urja Ganga Project to take gas to Bihar, West Bengal, Odisha, and Jharkhand as well as Kochi-Kootanad-Bangalore-Mangalore line and the Indradhanush North East Gas Grid. "These pipelines will connect supply and demand centers envisaged under the National Gas Grid."

Besides pipelines, GAIL is also expanding city gas distribution (CGD) networks for retailing of CNG to automobiles and piped natural gas to household kitchens. Investments are also planned for the expansion of petrochemical plants.

GAIL is looking to put up 400 CNG stations and give out a record 10 lakh piped natural gas (PNG) connections to household kitchens in the next 3-5 years.

The company is building a 2,655-km gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha. "Pipeline up to Patna has already been commissioned and the rest of the project will be completed by end 2020," he said.

Jagdishpur-Haldia & Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project, also known as the 'Pradhan Mantri Urja Ganga' project, was inaugurated by the Prime Minister in July 2015. GAIL has commenced city gas operations in all the six geographical areas (GAs), including in Patna and Bhubaneshwar, that was awarded to it along the Urja Ganga route, he said.

The pipeline will be extended to Guwahati by laying an additional 750-km line. At Guwahati, it would interconnect with the upcoming 1,500-km 'Indradhanush' pipeline network conceived to operate in the northeast region by the public sector oil and gas majors.

GAIL will also lay a 600 km Srikakulam-Angul natural gas pipeline.

"Renewable power is set to grow to 227 GW by 2030 and gas has a complementary role in effectively addressing intermittency and supplying peaking load," Karnatak said, adding gas-based power generation can take over during the night or on not so sunny days in areas getting solar power and also supplement hydro and wind projects during downtime.

He said 20-22 GW of coal-fired power plants are obsolete and 25 GW of stranded gas power assets could be utilised to help meet the carbon emission objectives of India, he noted.

Gas can also be used as fuel in steel plants, oil refineries, industries, and transportation, he said, estimating that power sector alone would need 100 mmscmd of gas and 50-55 mmscmd each would go for city gas distribution and fertiliser plants. Steel plants and refineries can consume 70 mmscmd between them.

DoT seeks Rs 1.72 trillion in past statutory dues from GAIL after SC ruling

The Department of Telecommunications has sought Rs 1.72 trillion in past statutory dues from state-owned gas utility GAIL India Ltd following the Supreme Court's ruling on revenues that need to be taken into consideration for payment of government dues.

Sources with direct knowledge of the development said DoT sent a letter to GAIL last month seeking Rs 1,72,655 crore in dues on IP-1 and IP-2 licences as well as Internet Service Provider (ISP) licence.

In response, GAIL has told DoT that it owes nothing more than what it has already paid to the government.

The firm told DoT that it had obtained ISP licence in 2002 for a period of 15 years, which expired in 2017. But GAIL never did any business under the licence and since no revenue was generated it cannot pay any amount.

On IP-1 and IP-2 licences, GAIL has told DoT that it generated Rs 35 crore of revenue since 2001-02 and not Rs 2,49,788 crore that has been considered for levying past dues, they said.

Sources said the dues being sought are more than three times the networth of GAIL and several times the actual revenue earned.

The Supreme Court had on October 24 ruled that non-telecom revenues earned by firms using spectrum or airwaves allocated by the government will be considered for calculating statutory dues.

While telcos such as Bharti Airtel and Vodafone Idea may have had non-telecom revenues generated from using the government licence and spectrum, firms such as GAIL had no such revenue.

DoT is seeking Rs 1.47 lakh crore from all telcos in past statutory dues.

Besides GAIL, DoT is also seeking Rs 1.25 lakh crore from PowerGrid which had both a national long-distance as well as an internet licence.

PowerGrid says it has an adjusted gross revenue (AGR) of Rs 3,566 crore since 2006-07 and after adding penalty it comes to Rs 22,168 crore.

Infrastructure provider category- I (IP-I) are those infrastructure providers who provide assets such as dark fibre, right of way, duct space and towers to the licensees of telecom services.

GAIL has a vast network of gas pipelines and it laid optic fibre along it to provide bandwidth to third parties.

Issuance of IP-II licence was discontinued in December 2005.

Sources said DoT estimates that the telecom operators owe Rs 55,054.51 crore as spectrum usage charges (SUC) as on October 31, 2019, while the figure for licence fees stands at Rs 92,642 crore.

Govt mulls spinning off GAIL's gas pipeline business into a separate unit

Prime Minister Narendra Modi’s administration is considering a plan to spin off the gas transmission business of GAIL India Ltd., the nation’s largest gas utility, into a separate unit, according to people with knowledge of the matter.

The oil ministry is seeking approval from the cabinet for splitting the transmission business from the gas marketing operations, the people said, asking not to be identified as the matter is not public. GAIL has appointed an international consultant to determine tax implications after the restructuring, they said. Oil ministry spokesman declined to comment, while a GAIL spokeswoman didn’t respond to email seeking comment.

The plan to carve the pipelines business into a fully-owned unit will bring greater transparency between the two businesses and may allow the government to sell shares at a later date. GAIL owns two-third of India’s operating gas transmission network, and the pipelines operation accounts for close to 40% of its earnings.

The government is seeking to keep the pipeline business separate for GAIL to help the company focus on expansion of its network and, at the same time, be transparent in offering the infrastructure to all.

GAIL’s pipeline network runs over 6,800 miles across the country and the company is investing about $10 billion is expanding the network. The company has also started a web portal for online booking of gas transportation capacity.