Non-Telecom PSUs To Take Common Legal Recourse For AGR: GAIL Chairman

GAIL India is in talks with non-telecom public sector undertakings (PSUs) to take a common legal recourse in the controversial adjusted gross revenue (AGR) issue. Among the companies it is in discussions with are Oil India (OIL) and Power Grid Corporation (PGCIL).

Earlier this month, the Supreme Court had directed the transmission major to approach the appropriate forum regarding the issue.

The department of telecommunications (DoT) had raised a demand of Rs 1.83 trillion from the company towards annual licensing fee, including interest and penalty of AGR. If the amount has to be paid, it will significantly affect the Rs 1 trillion capital expenditure plan the company has lined up for the next five years.

“We are hoping that we will not have to pay the money,” said Manoj Jain, chairman and managing director of GAIL.

The firms are yet to decide on the legal options, including approaching the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

Around 50 percent of the capacity expansion that the firm has lined up will be on the transmission business. For this, the government is already working on a proposal to come up with a separate subsidiary.

“We have lined up investments to the tune of around Rs 1 trillion for the next five years. Of this, around Rs 50,000 crore will be for the transmission business, Rs 10,000 crore will go towards petrochemicals and Rs 40,000 crore for its joint venture infrastructure expansion,” he said.

This includes an addition of 7,000 km of pipeline network to its existing capacity. GAIL is looking to double its revenue and increase profits by 1.5 times by 2025.

The investment plans are part of the overall $5 trillion lined up by the government and the strategy is to increase the share of gas to 15 percent in the overall energy basket.

The company expects the transmission business to have a larger share in the next five years as the demand for natural gas is expected to increase by 6-8 percent per year by then.

Jain said that the government is working on a proposal to have a 100 percent subsidiary for transmission and the new entity will be in place within a year “once the Cabinet nod is in place.”

GAIL, which owns and operates 5 mt LNG import facility in Dhabol, has already awarded contracts for construction of breakwater in Dhabol to Larsen & Toubro (L&T). “The terminal will start working to its full capacity in the next two-and-a-half years,” he said.

The country has already lined up an additional LNG capacity of 18 mt from the current 39 mt in the next few years.

―Business Standard