GAIL Expects Transmission Volumes To Grow At Average 10% Over Next Two Years

GAIL (India) Ltd. expects an average growth of 10-12% in its transmission volumes in FY25 and FY26, the management said at the latest analyst meeting. This indicates that the city gas distributor's transmission volumes could grow over 10 million metric standard cubic meters per day, each financial year.

GAIL posted an average of 124 mmscmd of transmission volumes in the fourth quarter of fiscal 2024. Volumes have further increased to 127–128 mmscmd recently, due to a rise in power sector demand, the management said in the analyst meeting.

The company expects average gas volumes to be about 130–132 mmscmd in FY25 and expects gas transmission volumes to further increase by 10 mmscmd in FY26, the company said in its latest analyst meeting.

With four pipeline sections expected to be commissioned in FY25, the volume growth will mainly be led by the city gas distribution and fertiliser sectors, according to the company. GAIL also stated that the company's network is connected to nearly 70% of 307 geographical areas.

The company has guided its marketing Ebitda in FY25 to be around Rs 4,000–4,500 crore. This compares to the previous Ebitda guidance of Rs 4,000 crore.

The company expects marketing volumes to reach 105 mmscmd in FY25.

The company expects a normalised year for its petrochemical business in FY25, with utilisation at 100% and margins at Q4 FY25 levels. Management also expects annual volumes to be 8.1 lakh tonne.

Management predicted that the FY25 capex would be Rs 11,500 crore, compared to Rs 11,400 crore in FY24.

The petrochemicals business will receive around 45%, or Rs 5,200 crore, of the total FY25 capex, while pipelines will receive Rs 2,600 crore, or 23%. The company said that it will allocate Rs 200 crore for each of the city gas distribution and exploration businesses, and Rs 1,200 crore for equity investments.

Gujarat State Petronet Ltd.'s recent tariff order could imply regulatory tariff upside for the company. This upside would come from the fuel cost passthrough that GAIL has been seeking. The company expects an upside of Rs 7-8 per million metric British thermal unit.

The Petroleum and Natural Gas Regulatory Board is reviewing its capacity and cost of gas assumptions, which are expected to be finalised in 6–9 months, the company said.

The company has filed a review petition for the Petroleum and Natural Gas Regulatory Board's March 2023 tariff order. The petition is filed to review and consider actual gas costs instead of the $3.6 per mmbtu considered by the regulator.

The transmission business is not getting any "Administrative Price Mechanism" gas (allocated by the government at a fixed ceiling price), and current gas costs are much higher than those considered in the tariff order, GAIL said.