Ratnagiri Gas and Power Pvt. Ltd (RGPPL) in Maharashtra is in the process of a demerger under which the company’s gas import terminal will be majority-owned by GAIL India Ltd and the power plant by NTPC Ltd, a top GAIL executive said on Tuesday. The project—once owned by US energy giant Enron Corp. which went bankrupt in 2001—in Maharashtra’s Ratnagiri district is now owned by GAIL and NTPC that hold 25.51% stake each; financial institutions hold 35.47% and Maharashtra State Electricity Board has a 13.51% stake.
“The demerger is in the process. The LNG terminal will be led by GAIL and will be a subsidiary of GAIL, and the power plant will be led by NTPC,” B.C. Tripathi, chairman and managing director, GAIL India told reporters. On Monday, GAIL said its March-quarter net profit fell 69% from a year ago due to a Rs 7.83 billion impairment charge on the RGPPL plant. Net profit fell to Rs 2.60 billion in the quarter from Rs 8.32 billion a year ago.
“In compliance of Ind AS 36, on impairment of assets, GAIL and NTPC carried out an assessment of impairment of investment in RGPPL as on 31 March considering the restructuring of the business. Accordingly, a provision of Rs 7.83 billion has been made,” the company’s press statement said. Tripathi said GAIL will invest Rs 10 billion in building a breakwater facility for the LNG terminal.
RGPPL now receives cargoes only between October and May due to the lack of a breakwater to protect vessels from choppy seas during monsoon months.
“Last year, we utilized up to 1.5 million tonnes of capacity and going forward, this would be 2.5 million tonnes and once the breakwater is in place, it will be 4 million tonnes of capacity. For breakwater, we have received the bids already and we would be awarding the contracts in a couple of months from now,” he added. GAIL’s capital expenditure for this fiscal is Rs 30 billion and the company is bullish on the petrochemicals segment.
It is also working on a 1.7 million tonnes petrochemical plant in Kakinada, Andhra Pradesh where GAIL and Hindustan Petroleum Corp. Ltd will be partners. This is currently in the developmental stage, Tripathi added. “Last year, we produced 577,000 tonnes of polymer. This was an increase of 40%. This year, we expect to go to almost 750,000 tonnes per annum. The second plant which was running at 40% capacity should go to almost 80-85% capacity this year. GAIL’s subsidiary, Brahmaputra Cracker and Polymer Ltd in Assam is also running at 85% capacity. In total, GAIL will be marketing 1 million tonnes of petrochemicals this financial year,” Tripathi said.
GAIL also plans to spend Rs 15 billion in city gas going forward. GAIL has been authorized to develop city gas supply in seven cities—Bhubaneshwar, Cuttack, Ranchi, Varanasi, Kolkata, Patna and Jamshedpur. These cities will start getting piped gas supply in the next few years.