Gujarat State Petronet Ltd (GSPL) has posted 7 per cent growth in net profit for the quarter to June. Margins were steady at 90 per cent.

Speaking to BTVi, GSPL Managing Director JN Singh says they are trying to increase Gujarat Gas supply to residential buyers and working on the gas pipeline from Mehsana to Bhatinda. With higher demand from industrial consumers like Essar Oil, OPAL and Torrent Power, GSPL expects better results in this financial year, he said. Excerpts:

Your transmission volumes have gone up 3 per cent sequentially and the tariff has gone up 3 per cent. In terms of volumes, it is around 25.1 (million metric standard cubic meter per day (mmscmd) and your realization or tariff is at around 1.07 standards cubic meter. What is the guidance on both of these going ahead?

We are trying to provide Gujarat Gas supply more to domestic consumers and others.

And, naturally all of it would be transmitted to the GSPL pipeline. In the slightly longer scenario, we are building up this gas pipeline from Mehsana to Bhatinda.

The tenders are already floated in the market. Of course, it will take about 2 years for the entire pipeline to come up.

But otherwise, in the domestic scenario – in Gujarat itself – we are trying to increase the consumption through Gujarat Gas and once that consumption increases, we naturally will then have good impact on GSPL as it is also the main transmission line.

Talking about your operation expenses, it was down in Q1 to 15 per cent sequentially and the system usage gas had lower cost there. Also, the powers in maintenance cost have been lowered. What measures have you taken to curb cost in the first quarter?

Basically, our finance charges have come down quite significantly by around ₹6 crore or so, because we have substituted some long-term high-cost debt by more reasonably low cost debt. As the company is more financially strong it will be able to get low cost debt. Operating and maintenance expenses have also come down by ₹6-7 crore. We intend to continue this trend throughout the year. So while the employee cost more or less remains same, the operating expenses and finance costs have come down.

About your volume growth guidance, there are two or three triggers. Currently, spot L&G over the last one and a half years is competing with Naphtha because it is cheaper and is around $6 per mmBtu. So what happens to the refinery demand to two of your specific clients Essar Oil as well as OPAL, which are ramping up its capacity? We spoke with ONGC a while back and they may complete their ramp up by 2017 end and taking the 0.5 mmscmd of gas from GSPL. Then you have also got the Mundra expansion of 5 million tones and Petronet’s Dahej expansion. How much of volumes are you seeing adding to your company?

In the immediate future, Essar Oil has increased the volume from 0.9 to 1.04 mmscmd as compared to the Q1 last year. Torrent Power has also increased from 1.85 to 2.99 mmscmd. But at the same time, there has been slight decrease in the volume of Gujarat Gas. We expect that Gujarat Gas volume will increase.

And as we have mentioned that as reagrds other customers, which are long-term customers, we expect an increase in volume from them too. But it would be a bit premature for me to give you a guidance how it will play out in the next few quarters.

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