Annual Report - 2005-06 - GAIL (India)

GAIL has borne a subsidy of Rs.428 Crores
in FY2004, Rs.1137 in FY2005 and Rs.1064
Crores in the year under review.
The Committee on Pricing and Taxation
of Petroleum Products, set up by the
Government of India in October 2005 and
headed by Dr. C. Rangarajan, has submitted
its report (The Rangarajan Committee
Report) to the Government. The Committee
was set up to look into the various aspects
of pricing and taxation of petroleum
products with a view to stabilizing/
rationalizing their prices. As per the
recommendations of the committee, GAIL is
expected to be kept out of the subsidy net.
TARIFF REVIEW
The Government of India has referred
review of tariff for HVJ & DVPL to the Tariff
Commission. The Tariff Commission has
submitted its recommendations to the
Government.
Currently, the transmission tariffs of your
Company are partly regulated and partly
non-regulated. While the interstate gas
pipelines i.e. HVJ and DVPL are regulated,
the transmission tariffs of the regional gas
pipelines and the LPG pipelines are not
regulated.
E&P
Your Company holds a participating stake
in 16 blocks with a focus on augmentation
of gas supplies for the future pipelines. The
basic nature of the business is such that the
availability and extent of reserves is highly
uncertain.
DEREGULATION
The Deregulation / Liberalization of Petroleum and
Natural Gas Sector will open up newer avenues for
your Company. The Introduction of competition will
help your Company to further improve.
At present there is a huge need for Gas
Infrastructure in view of emerging gas supply
prospects. Notwithstanding the competition, your
Company has a first mover advantage to tap the
opportunities that arise out of a growing gas sector.
DIVERSIFICATION
Your Company has employed new business models
and synergistic diversifications across the gas
value chain in the form of Joint Ventures, Strategic
Alliances and Acquisitions.
LPG & CNG / PNG Marketing / Retailing will not
only help your Company to grow but will also help
your Company become a house hold name. Your
Company is not only diversifying but also securing
its supplies through LNG Sourcing. Cross-border
gas trading opportunities have opened up a new
sphere of supply and demand.
MATERIAL DEVELOPMENTS
IN HR AND INDUSTRIAL
RELATIONS
The total employee strength of your
Company stood at 3443 employees as
on 31st March, 2006.
Industrial Relations scenario in
general during the year under review
continued to remain harmonious and
cordial. There was no unrest on account
of ‘strike’ or ‘work to rule’ or ‘Go slow’ or
‘lockout’ during the year and no man
hours lost on this count.
There has been continuous thrust on
enhancing the employee motivation
and development through various
mechanisms. GAIL continues to
focus on various employee oriented
initiatives with a view to harness
potential of employees for their self
development and organizational
growth as well. Some of the major
initiatives undertaken during the year
include formulation of terms and
conditions of deputation for foreign
assignments, providing interest free
loans to employees affected by the
earthquake in Jammu & Kashmir and
unprecedented rains in Maharashtra
and Gujarat, institutionalizing long
service awards and constitution of a
Gender budgeting cell.
OVERVIEW OF THE FINANCIAL PERFORMANCE AND
OPERATIONAL PERFORMANCE
OPERATIONAL PERFORMANCE – A SNAPSHOT
Quantity Produced/ 2005-06 2004-05 Growth as Last 5
Transmitted compared to year
previous year CAGR
Natural Gas transmitted
(MMSCMD) 78.87 71.56 10% 5%
LPG (MTs) 1,042,219 1,094,835 (5%) 6%
Petrochemical (MTs) 311,469 298,787 4% 10%
Propane/Pentane/SBPs (MTs) 283,484 298,264 (5%) 19%
LPG transmission (MTs) 2,228,568 2,137,504 4% -
GAS TRANSMISSION
OPERATIONAL HIGHLIGHTS
The previous five year trend of Natural Gas throughput (in MMSCMD) including RLNG is as below:
MMSCMD
80
78
76
74
72
70
68
66
64
62
63.4
Natural Gas Throughput
62.84
71.56
78.87
EMERGING TECHNOLOGIES
Your Company is making forays in the exploitation
of emerging gas transportation technologies
like CNG by ships, as gas hydrates, CNG by trucks
and LNG by trucks, all of which are relevant
for transportation of stranded gas. Besides,
your Company is focusing on Coal Gasification
technologies like in-situ lignite gasification and
above-ground coal gasification. In the area of
petrochemicals, your Company is exploring
emerging technologies, which aims to produce
petrochemicals from lean natural gas so as to
reduce the petrochemical business dependence on
rich fractions of natural gas.
60
61.6
FY2002 FY2003 FY2004 FY2005 FY2006
During the year under review, your Company was
able to market the additional RLNG available from
the LNG regasification terminal at Dahej well in
advance, through long term contracts.
AVAILABILITY
Your Company has a robust maintenance
program to ensure complete availability
of the pipeline network. Besides, your
Company engages in rigorous pipeline
integrity tests to enhance the economic life
of its assets. For the last three years, your
Company has been able to ensure 100%
uninterrupted supply hours for major NG
trunk pipelines for year 2005-2006.
48 Winning Momentum 49