The existing agreement between the country's largest gas producer (ONGC) and transporter (Gail) expire in the new millennium. The ONGC now supplies more than 19 billion cubic metres (BCM) of gas to Gail annually.

Gail chairman and managing director CR Prasad confirmed after the company's annual general meeting (AGM) on Friday that meetings on the gas supply agreement had taken place "at the director level." The higher expectations from ONGC, he said, were because of increased availability of gas expected in the Krishna-Godavari basin, where ONGC has recently struck oil and gas.

Along with the supplies from the private sector joint ventures and the liquefied natural gas (LNG) import projects, GAIL's gas supplies should jump 60 per cent by 2003. Not surprisingly most of the company's Rs 10,000 crore investment planned for the coming six years are for expanding its gas pipeline grid.

The Rs 6647 crore-turnover navratna will invest Rs 3000 crore to expand the capacity of the Hazira Bijaipur-Jagdishpur pipeline to 60 MMSCMD from 33.4 MMSCMD at present. It will also spend another Rs 800 crore on a pipeline from Hazira to Uran and invest Rs 600 crore in new gas pipelines in the Krishna-Godavari and Cauvery basins.

The gas transmission company, incidentally, has also diversifed into petrochemicals and plans to venture into power production as well. Selling gas will, however, continue to remain its prime business.

Gail director finance, JK Jain said most of the investment would come from the internal resources of the company and roughly Rs 4000 crore would be raised as debt. The borrowings, he said would preferably be in rupee terms.

The higher expectations from ONGC come even as gas supplies from the Bombay offshore dropped by nearly five million tonne (5.55 billion cubic metres) in the past year or so. The Bombay High fields, which account for more than half of ONGC's gas production, supply only 11.5 million tonne (12.77 BCM) of natural gas now, compared to the 16 million tonne (17.77 BCM) committed earlier.

Prasad said Gail's joint venture with the Tatas and Total of France for importing liquefied natural gas (LNG) at Trombay would meet the shortfall in gas supplies from the ONGC fields. Gas supplies at Uran from ONGC's offshore fields along the west coast were expected to drop further by another five million tonne (5.55 BCM), he said.

The LNG import project at Trombay, in which GAIL has opted for a 33.33 per cent stake, will be able to supply gas by the year 2002. The project should be able to supply 20 million cubic metres of gas in another four years. Petronet LNG's five million tonne per annum-capacity terminal at Dahej is expected to bring in another 20 million cubic metres of natural gas by then.

Gail net profit rises to Rs 1,059.92 cr

Gail shareholders approved a 35 per cent dividend proposed by the GAIL board for the 1998-99 fiscal, even as the Net profit of the ``navratna'' moved up marginally to Rs 1059.92 crore last year, from Rs 1020.31 crore in 1997-98. The Gail turnover shot up by 15 per cent, however, to Rs 6647 crore, from Rs 5736 crore the year before. The gross margin of the company was Rs 1492 crore, compared to Rs 1096 crore in 1997-98. The 15 per cent increase in dividend will tantamount to a 75 per cent increase in pay-out by the company. The gas transmission company will cough up Rs 295.98 crore as pay out to shareholders, compared to Rs 169.13 crore for 1997-98. The Union government's shareholding in the company is now 83 per cent, while fellow PSUs Indian Oil Corporation (IOC) and the Oil and Natural Gas Corporation (ONGC) have a stake of 4.88 per cent each. In the current fiscal, GAIL is targeting a more modest profit of Rs 1000 crore, as its dues from the gas pool account peter out. The gas pool money shored upGAIL's profits by Rs 662.40 crore in 1997-98 and by Rs 451.34 crore in 1996-97. Last year ``miscellaneous income'' contributed only Rs 251.04 crore to the gas transmission company's profit before tax of Rs 1223.77 crore.