State gas utility GAIL India Ltd today reported a 23 per cent drop in its first quarter net profit as it imported high priced LNG amidst falling international rates for the commodity.
GAIL reported a net profit of Rs 621.44 crore, or Rs 4.90 per share, in April-June as opposed to Rs 808.17 crore, or Rs 6.37 a share, net profit in the same period a year ago, the company said in a statement here.
The company booked an "under-recovery" of Rs 190.31 crore as its inventory of liquefied natural gas (LNG) piled up due to customers opting to take supplies from other importers of the fuel who offered supplies at lower rates.
GAIL imported LNG at about USD 12-13 per million British thermal unit while spot LNG rates in international markets fell to USD 10.5 per mmBtu in May/June. This led to a situation where customers opted for getting cheaper gas from importers like Shell and GSPC, leading to inventory pile up with GAIL.
The company said it has "recouped" the under-recovery in the current quarter.
"Due to operational imperatives in the course of balancing the overall portfolio of APM (administered price gas), non-APM, Panna/Mukta and Tapti gas, long-term LNG, medium term LNG, spot LNG etc, imbalance created additional sale of APM gas resulting in under-recovery of imported LNG purchase value by Rs 190.31 crore as on June 30, 2014, which imbalance has been recouped in the next quarter," GAIL said in a filing to stock exchanges.
APM gas is produced by state-owned firms and is priced at USD 4.2 per mmBtu. However, there hasn't been any increase in production of this gas.
"We don't know how GAIL has made additional sale of APM gas. There was hardly any change in output of APM gas," said a senior executive at ONGC, which produces most of the APM gas.
In Parliament, Oil Minister Dharmendra Pradhan said ONGC produced 5655 million cubic meters of gas in April-June. This compared with 23284 mmcm in full 2013-14 fiscal or an average of 5821 mmcm per quarter.
GAIL also said it lost Rs 241.59 crore in revenue after oil regulator PNGRB lowered its pipeline tariff. "Revenue of Rs 241.59 crore has been derecognised during the quarter ended June 30, 2014 in view of revision of natural gas pipeline tariff by PNGRB," the filing said.
The firm paid Rs 500 crore in fuel subsidy in