GAIL (India) Ltd, the country’s largest natural gas transmission company, wants to double its petrochemical output in the coming fiscal, BC Tripathi, Chairman and Managing Director, said. .

“In FY-17, our polymer output was 5.77 lakh tonnes. We want to increase that to 8 lakh tonnes in FY-18 from the Uttar Pradesh plant and about 2 lakh tonnes from our subsidiary in Assam, Brahmaputra Cracker and Polymer Ltd,” Tripathi told newspersons.

The gas utility has ongoing expansion projects which require investments of up to ₹30,000 crore, out of which ₹20,000 crore over the next three financial years will be invested in creating 6,000 km of natural gas pipelines and a ₹3,000-crore coal gasification project at the Talcher fertiliser plant in Odisha. The Talcher project, in partnership with Coal India and Rashtriya Chemicals and Fertilizers, is awaiting approvals from the Environment Ministry and the Union Cabinet, Tripathi said.

Dabhol project The company is also investing ₹650 crore, Tripathi said, to build a breakwater (a physical barrier from rough waves) at the Dabhol gas import terminal in coastal Maharashtra, converting the project into an all-weather port to bring in liquefied natural gas cargo. The Dabhol project is part of Ratnagiri Gas and Power Pvt Ltd, a joint venture of GAIL and NTPC.

A demerger is currently under way, with GAIL and NTPC swapping their equity holdings in the power plant and the LNG terminal, respectively. The demerger contributed to a one-time impairment charge of ₹788 crore in GAIL’s March 2017 quarter earnings, resulting in the 69 per cent fall in net profit that the company reported on Monday.

GAIL had made an investment till date of ₹975 crore in the Dabhol project. Last quarter’s write-off and the upcoming equity swap (which will give GAIL over 70 per cent equity holding in the terminal) will make the LNG plant self-sustainable, Tripathi added.

Recently, GAIL announced that it has signed LNG supply contracts with a supplier of shale gas in the US till FY19.

A research report by Jefferies had raised concerns on the “the expensive long-term LNG contracts that GAIL has contracted, a total of 40 mmscmd of long-term LNG by FY19, most of which are out of the money versus its spot (cargo).” However, the company management said that the viability of the long-term versus spot contracts depends on the price movement of natural gas globally. “We will keep some volumes for trading arbitrage. It all depends on the movement of crude oil, Henry Hub (the benchmark of natural gas prices in the US) and the US dollar,” Tripathi said.

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