Expecting Rs 2400-2500cr subsidy this year: GAIL

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Expecting Rs 2400-2500cr subsidy this year: GAIL

Since losses for the company are much higher, the chief financial officer of GAIL,PK Jain, expects the subsidy from the government to increase to Rs 2400-2500 crore for the current year.

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Since losses for the company are much higher, the chief financial officer of GAIL expects the subsidy from the government to increase to Rs 2400-2500 crore for the current year. In an exclusive interview to CNBC-TV18, PK Jain says that the subsidy will mainly be on APM gas, and the benefit will be provided in the fourth quarter.

Gas Authority of India (GAIL) posted an 13% rise in its December quarter profit to Rs 1091 crore year-on-year, partly helped by the 35% rise in sales.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: What will the full year subsidy picture be like this time around and therefore how much would you have to provide and pay in the fourth quarter this year?

A: Last year subsidy was Rs 2111 crore and we are requesting ministry to maintain at least that level. For nine months till now, we have provided at Rs 1785 crore. Naturally this time the losses are much higher compared to previous year then the subsidy is also expected to be as high and we are expecting around Rs 2400-2500 crore subsidy in the current year and the benefit is to provide it in the fourth quarter.

Q: Could you just update us on the situation with petroleum natural gas regulatory body with respect to the differences on the marketing margins? Has anything being worked out there because if it goes against you it would be quite adverse for GAIL?

A: Marketing margins are on two things, one is for the administered price mechanism (APM) produced gas and other is for the imported gas. Imported gas is market driven and government doesn't have any interference in the imported gas. For APM gas, ministry by way of gas orders has recently introduced Rs 200 per 1000 mmscmd. That's why whatever will come will be on the APM gas.

Since the government recently introduced this, they will not go back on this issue. Regarding the imported gas, the government may not interfere in that thing because that's market driven.