Russian gas supply snag leads to GAIL profit tumbling 46%

NEW DELHI, NOV 5: GAIL (India) Ltd, the nation’s largest gas distributor, on Friday reported a 46 per cent drop in its September quarter net profit as supply disruptions from a former unit of Russian energy giant Gazprom hurt business.

Net profit stood at Rs 1,537.07 crore in the July-September quarter compared to Rs 2,862.95 crore in the same period a year back, according to a stock exchange filing of the company.

The profit for the firm that transports and sells natural gas to users like fertiliser plants and CNG retailers was sequentially down at 47.2 per cent from Rs 2,915.19 crore profit in the April-June quarter.

At an investor call, GAIL Director (Finance) RK Jain said Gazprom Marketing and Trading Singapore (GMTS), now a subsidiary of Gazprom Germania, stopped delivery of LNG cargoes to the company under a long-term contract in late May.

So far, GMTS has defaulted on the supply of 17 cargoes or shiploads, including 13 in the second quarter (July-September), he said.

To mitigate disruption in the supply of 8.5-9 million standard cubic meters per day or roughly 20 per cent of all gas supply, GAIL had to cut supplies to fertiliser plants as well as some industrial consumers.

It also reduced the gas supply of its Pata petrochemical plant in Uttar Pradesh by as much as 3 mmscmd, leading to the plant operating currently at just 40 per cent of the capacity, he noted.

This reduced capacity and lower petrochemical prices hurt earnings from the business.

-PTI