It actually plans to do more. GAIL's corporate strategy is geared to not only increasing gas supplies, but expanding its earnings from LPG production and petrochemicals. Prasad says GAIL's earnings from LPG sales would increase to 20 per cent from 15 per cent now, while its gas-based petrochemicals plant at Pata in Uttar Pradesh should contribute to at least 10 per cent of the company's total turnover. In an interview with The Financial Express, Prasad talks about the future of GAIL.

Excerpts

In another three years gas prices at home will get completely linked to fuel oil prices in the world market. The gas transmission charges for GAIL, however, will remain partly controlled as they can only be revised every three years. Whatwill liberalisation mean for GAIL ? How will it impact your earnings?

We are thinking of the post-2002 scenario. We will mainly concentrate on expanding our gas supplies. By the year 2004-05 the demand for natural gas in the country is expected to touch 183 million cubic metres per day, compared to roughly 68 million cubic metres per day now. One of our major concerns is to increase the availability of gas to consumers, especially in the power and fertiliser sectors.

At present, we supply 65 million cubic metres of natural gas per day through pipelines in 13 states. We have already increased the capacity of the (2300 km-long) Hazira-Bijaipur-Jagdishpur (HBJ) pipeline to 33.4 million metric cubic metres per day (MMSCDM) from 18.2 MMSCMD. We can easily expand the capacity of the HBJ pipeline further to 60 MMSCMD. That expansion will be complete by 2001. We will become more and more a formidable gas transmission company.

Since 1991, LPG production has been GAIL's second key business interest andalready you have four plants on stream. LPG production will be more strongly impacted by liberalisation, as the government subsidyon the product is rolled back.

When controlled products are thrown open to market prices, our turnover will increase. Next year, in the year 2000, we plan to produce 0.9 million tonne of LPG. Last year, after our plants at Usar in Maharashtra and Lakwa in Assam went on stream, we managed to produce 0.7 million tonne of LPG. The LPG plant at Gandhar will be the seventh unit to go on stream. It will take up GAIL's LPG producing capacity to 1.1 million tonne. We will concentrate on bulk production. Distributing the gas will remain the prerogative of the Oil Coordination Committee (OCC). Already LPG imports are on OGL and the private sector is in the business. A lot more private sector companies will enter this sector and there will be more competition.

What about LNG? GAIL is already a key stakeholder in Petronet LNG. Is LNG import going to be another key area ofdiversification for GAIL?

We are part of another consortium in Maharashtra, along with Tata Electric and Total SA of France. We may also import LNG from Iran. The Tata Electric and Total joint venture will import LNG in Maharashtra. GAIL will essentially distribute the gas to consumers through a 200 km to 300 km-long pipeline network.

Total was reported to have offered an equity stake to GAIL in the venture?

That possibility is still there. Some equity in the venture may be necessary to know the operations maintenance part of it, but we have not yet decided on picking up equity in the project. Negotiations are still on.

GAIL's diversification from carrying gas to consumers will, then essentially be in gas related businesses?

Yes, we want to bring in more gas into the system. We want to bring in gas from Iran, from Myanmar and other countries. We want to bring gas into Calcutta.

How about GAIL's strategic alliance with the ONGC through the equity swap? Will that not take GAILinto an entirely new realm of activities, oil exploration and production?

Discussions have started with ONGC on the nature of the strategic alliance. The alliance may be for exploration in deep waters or drilling. We are studying various options for hydrocarbon exploration, but our priority will be to tap gas fields. We may get oil in the process.