GAIL to invest Rs 25,000 cr over 5 yrs, looks at doubling profit

With this massive expenditure, GAIL is looking at doubling its profit after tax, the company’s finance director R K Goel told The Indian Express. GAIL recorded a net profit of Rs 2,387 crore in 2006-07, up 3.33 per cent from Rs 2,310 crore in 05-06.

The Rs 25,000 crore expenditure will be financed from internal resources (Rs 10,000 crore) and domestic and foreign borrowings. “We will raise money from external commercial borrowings, domestic bonds, term issues and loans,” said Goel. On being asked if borrowings would be from the domestic market or from abroad, Goel said that the company would borrow wherever interest rates were lower.

GAIL may also offload its Rs 4,672 worth, 2.4 per cent stake in Oil and Natural Gas Corporation (ONGC) to finance the expenditure. “We may look at selling part of our holding in ONGC to meet the cap ex requirements,” Goel said.

60 per cent of the capital expenditure will be on laying new pipelines. Upgradation of the Dahej Vijapur pipeline and Vijapur-Jagdishpur pipeline are planned while the Chainsa-Gurgaon-Jhajjar-Hissar, Jagdishpur-Haldia and Dhabol-Bangalore pipelines are proposed.

GAIL also has plans to diversify its downstream presence (LNG terminals, petrochemicals and city gas distribution) and move upstream (exploration and production).