GAIL scouts for acquisition to augment renewable portfolio, to foray into hydrogen

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August 22, 2021 11:48 AM

The company had in 2019 won a bid for 874 MW operational wind power projects of IL&FS for Rs 4,800 crore. But IL&FS' other partners used the first right of refusal to block GAIL's bid, he had said.

GAIL presently has a 1.6 million tonnes per annum polyethylene and PP production capacity.

India’s top gas company GAIL will foray into hydrogen generation and take the acquisition route to scale up its renewable energy portfolio as it pivots business beyond natural gas to align with energy transition being witnessed across the globe.

As part of a push to embrace cleaner forms of energy, GAIL will be laying pipeline infrastructure to connect consumption centres to gas sources while also augmenting its renewable energy portfolio, GAIL Chairman and Managing Director Manoj Jain said.

“The global energy sector is witnessing a paradigm shift in recent years as the world is transitioning to a sustainable energy future,” he said in the company’s latest annual report.

To accomplish a cleaner primary energy mix for India, the government is emphasizing the expansion of the natural gas sector so as to achieve a gas-based economy along with growth in renewables. GAIL as a leading integrated energy major has aligned with this vision, he said.

The firm is laying around 6,000-kilometres of pipeline, including a west coast to east coast pipeline from Mumbai to Jharsuduga in Odisha via Nagpur, he said. It currently has around 13,700-km of natural gas pipeline network.

GAIL “will be selectively investing in the renewable energy domain given the future growth potential,” he said. The company “has been scouting for opportunities to scale up the RE portfolio from the current 130 MW through bidding and other inorganic routes such as mergers and acquisitions.”

“In addition, the company is also foraying into ethanol and hydrogen generation,” he said without giving details.

Hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. Many countries are venturing into hydrogen production from a variety of domestic resources, such as natural gas, nuclear power, biomass, and renewable power like solar and wind.

In India, companies ranging from Reliance Industries to Indian Oil Corporation and NTPC have announced ambitious plans for generating hydrogen. GAIL too joins that list now.

GAIL, Jain said, has the largest and most diverse LNG portfolio in India that can offer both stable prices and reliable supply to consumers.

The company “shall be pushing for higher gas usage in the industrial segment, transport segment using CNG and LNG, Trigeneration, cold storage, etc,” he said, adding the firm was looking for avenues to supply gas in the new segments like LNG trucking (LNG for long-haul transportation).

He said GAIL is also looking to expand its presence in petrochemicals and also diversifying into high-margin downstream businesses.

“The focus is on having polypropylene (PP) production capacity through setting up two polypropylene units (Propane Dehydrogenation Polypropylene Plant – PDHPP in Usar, Maharashtra and PP plant at Pata, Uttar Pradesh) and assessing opportunities in certain speciality chemicals in India,” he said.

GAIL presently has a 1.6 million tonnes per annum polyethylene and PP production capacity. It is also setting up at least two compressed biogas plants and an ethanol factory.

India, which imports 85 per cent of its crude oil needs, is stepping up efforts to explore new forms of energy to clean up the skies and reduce dependence on imported fuels.

“We have 120 MW of renewable energy capacity which we want to scale up to 1GW in next 3-4 years,” Jain had told PTI last month.

GAIL will bid for a 400 MW solar power capacity being auctioned by SECI (formerly Solar Energy Corporation of India) in Rewa, Madhya Pradesh.

The company had in 2019 won a bid for 874 MW operational wind power projects of IL&FS for Rs 4,800 crore. But IL&FS’ other partners used the first right of refusal to block GAIL’s bid, he had said.

GAIL has signed up with state-run power gear maker BHEL for its renewable energy foray. The tie-up looks to leverage the competitive strengths of both companies. GAIL will be the project developer and BHEL will be a project manager and EPC (engineering, procurement and construction) contractor.

The move by GAIL, which commands a 75 per cent market share in gas transmission and more than 50 per cent share in gas trading in India, is seen as part of the government’s vision to prepare for the energy transition process, under which the share of gas in the energy mix is sought to be raised to 15 per cent by 2030, from the current 6.2 per cent.

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