GAIL India, the state-owned gas utility, on Friday posted a massive 64 per cent drop in its December quarter net profit as it could not sell imported gas contracted at higher price.
Net profit in October-December at Rs 604.08 crore was 64 per cent lower compared to Rs 1,679.4 crore in the same period a year ago, the company said in a statement.
The profit was impacted by lower off take of long-term contracted LNG by power and fertiliser plants, it said.
Liquefied natural gas (LNG) from Qatar is imported on a long-term contract at close to $13 per million British thermal unit whereas the same fuel is available in the spot or current market at about $7.
This has lead to a situation where users prefer buying spot LNG rather than Qatar gas.
GAIL buys 60 per cent of the 7.5 million tons a year of LNG that Petronet LNG imports from RasGas of Qatar on a 25-year contract.
Pre-tax profit from marketing of natural gas fell to one-tenth.
It was Rs 505.36 crore in third quarter of previous fiscal and this year it was just Rs 51.14 crore.
Net profit in Q3 was also impacted by Rs 500 crore fuel subsidy, the company said.
GAIL and other oil and gas producers like ONGC have to bear a portion of revenue that state retailers lose on selling LPG and kerosene at government controlled rates.
GAIL had in the second quarter ended September 30 did not account for the Rs 500 crore fuel subsidy, which it has paid in the third quarter.
The company has not provided any subsidy for October-December as it has not received order from Oil Ministry for sharing of the under-recoveries or revenue losses for the quarter, it said.
GAIL said profit was also lower due to reduction in domestic gas availability by over 5 million standard cubic meters per day and higher feedstock cost for petrochemicals.
Revenue fell from Rs 16,246.71 crore in quarter ended December 31, 2013, to Rs 15,109.7 crore in the third quarter of current fiscal.
While sale from petrochemical business increased by 7 per cent to Rs 1,246 crore, revenues from LPG and liquid hydrocarbons business fell to Rs 1,054 crore from Rs 1,933 crore in the corresponding period of last year.
Natural gas sales in October-December were marginally lower at Rs 13,167 crore as against Rs 13,287 crore in the corresponding period of the last year. But gas transmission business revenue fell to Rs 995 crore from Rs 1,189 crore.
GAIL said natural gas sales fell to 74.08 mmscmd from 79.74 mmscmd in third quarter of last fiscal. It said the company board on Friday could not take up payment of interim dividend for the 2014-15.