Thinking big for small units

Sep 10 2013, 20:03 IST
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SummaryPSU reaches out to SMEs along its pipeline network to diversify income streams.

Grappling with idle pipeline capacity, GAIL India has embarked on a new strategy to ramp up LNG supplies to small-sized industrial units located along its 12,000-km pipeline network.

GAIL has no authority over gas allocated on a priority basis to power and fertiliser companies, as this is decided by the government. Therefore, we will channelise more energy in catering to smaller industrial units, which include a wide range of companies like ceramics, glass and auto units, said Prabhat Singh, director-(marketing), GAIL.

Singh said a there is a huge customer base of units which are not so price-sensitive and R-LNG is going to be a win-win fuel option for such units across the value chain. Many of these clients are struggling with power shortages or are attempting to move away from expensive fuels like naphtha. GAILs subsidiary at Singapore has been given an open mandate to source all spot LNG and even long-term volumes to cater to these consumer segments.

Rather than just continuing with its traditional focus on providing the ailing fertiliser and power companies with domestically produced gas, which is dwindling in volumes, GAIL will put more thrust on offering small industrial units with imported

R-LNG. The company has put on hold plans to lay new pipelines, and will instead create sub-lines that connect to small industrial clients.

This year GAIL has identified around 130 such connections, which can potentially add R7,000 crore-8,000 crore to GAILs top line. Another 100 are expected to be added by the next year. Connecting to them requires no massive investments either as many of these units are located within 50 km of GAILs vast network of pipelines. The company has recently created a new group called last mile connectivity to reach out to the small industries.

For reasons ranging from falling domestic production of gas (particularly RILs KG D6 gas) to the stalling of various power and SEZ projects, GAILs average pipeline utilisation levels stands today at just 50-55%. Across the country, GAILs pipeline capacity is about 230 million metric standard cubic metres per day (mmscmd).

GAIL has now restructured the marketing function to seek out and strike deals with the small units. The zonal head and the head of operations and management (O&M) will be jointly responsible for last mile connectivity, unlike earlier when the projects team at the central office held the responsibility.

In the lean period, when the construction activities on trunk (main) pipeline are usually

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