Lower gas price positive for all stakeholders: Gail CMD

Below is the transcript of BC Tripathi’s interview with Latha Venkatesh, Anuj Singhal and Sonia Shenoy.

Latha: How have you understood the entire process, will it mean that if you import more you make more money or will you have to sacrifice all the margins?

A: The larger objective of this decision is to revive the stagnant power plant which are stranded. To supply additional gas we will have to import more gas and the detail of the scheme will be worked out in few days to come. However, definitely this will be a good news for all the stakeholders right from the liquefied natural gas (LNG) terminal pipeline, the traders like GAIL and Gujarat State Petroleum Corporation (GSPC), the buyers like power plant, the banks whose money has been stranded and the consumer at large.

Sonia: What is the incremental volume of LNG that the government expects to import on an average?

A: As far as current assessment which we have done, it is almost 18-20 million standard cubic meter additional gas will be flowing in the system. However, that will depend upon how the demand is generated and which state is demanding additional power. So, this is the current assessment and going forward depending upon the demand-supply this may go further up.

Anuj: The other issue is that we believe that the new gas prices now will be much lower than what was earlier envisaged even going by Rangarajan formula. Do you think that companies like yours are now in a much sweeter spot compared to six months back and do you see that reflecting in your numbers over the next one or two years?

A: Definitely this will be a good news for all the stakeholders and the additional volume when it is coming the re-gas terminal utilisation, the Dabhol utilisation will improve, pipeline implementation will improve, power plants will be generating power. So, this will be good news for everybody. Therefore, whatever price comes will be helpful to all the stakeholders.

Latha: I was going to ask you your take on Ratnagiri gas as well; does it break even at all if it operates at 30 percent?

A: We will like to operate this so that we are able to service the loan given from the lenders. So, to that extent at least we will be running. LNG terminal today is running almost 40-50 percent capacity. However, baring few months of monsoon rest of the time we can operate the LNG terminal. So, it will depend how the demand of power is there.

Sonia: You did mention that the incremental volume of LNG could be about 18-20 million standard cubic meters, how much could this impact your own earnings positively and even on the tariff front how much lower do you think the tariff could head from here?

A: As far as the existing supply is concerned there is no reduction as far as the tariffs and marketing margins are concerned. For additional volume whatever we will be bringing, we will be giving some discount both on transmission tariff and marketing margins. The exact number is difficult to say at this point in time but this will be an upside for all of us.