Bhuwan Chandra Tripathi has been involved with almost everything related to natural gas distribution in India, be it trunk pipelines or retail distribution. He also happens to be the longest serving chief of a public sector undertaking (PSU) and has worked with four ministers - Murli Deora, Jaipal Reddy, Veerappa Moily and Dharmendra Pradhan - during his 10-year tenure at the top.
Over the last three fiscals, under his stewardship, GAIL India has seen its turnover increase from Rs 49,237 crore in 2016/17 to Rs 75,126 crore in 2018/19. During the period, profits almost doubled from Rs 3,368 crore to Rs 6,025.67 crore. The gas pipeline network expanded from 11,000 route kilometres to over 13,000 route kilometres.
That is not all. Work is on to expand the Indian gas grid to 20,000 kilometres by 2022 covering the eastern region, the North-East and South India. "I have done all the ground work, awarded contracts, approved projects, brought finance, and the first stage is already done," says a pleased Tripathi. Out of 22 million tonnes of gas that India consumes, 14 million tonnes is sourced by GAIL. Of that, it sells two million tonnes in the global market. The four broad areas of operations in GAIL include expanding the gas pipeline network, gas retailing, the Assam petrochemical plant and international operations.
Tripathi retired as the Chairman and Managing Director (CMD) of GAIL India in end-July, but he is a man on the move, advising a clutch of companies on their gas plans. When he took over, GAIL had a debt of Rs 14,000 crore. Now, it hardly has any debt on its books. Today, the company is executing projects worth Rs 70,000 crore.
While transporting gas in bulk was the original role of GAIL, it entered gas retailing by selling compressed natural gas for vehicles and started piping natural gas to homes across the country. Today, 112 towns are covered under the gas grid.
While all along GAIL has been focusing on import, distribution and retailing of gas, Tripathi set up the international operations. International exposure is important considering that India imports almost 90 per cent of the gas it uses. "Unless our people know how gas is traded globally, how can they take the right decisions?" says Tripathi. He created a group of people with expertise in gas trading, swapping and hedging, called ETRM - Exchange for Trading and Marketing - to build a new skill set among public sector employees. It has three units: one each in Delhi, Singapore and Houston. It has nine people in Singapore, 10 in Houston and seven in Delhi.
"Operations in the US and Singapore have helped. Our profitability went up by 30 per cent because of the work in gas trading. That has been a major contributor to profitability," says Tripathi. In the last fiscal, the Singapore office achieved a turnover of almost a billion dollars.
However, one big problem area in India is low demand. Unless the country's per capita energy consumption increases, this will remain a problem. Though India accounts for 18 per cent of the global population, it uses only 6 per cent of the world's primary energy. The country's energy consumption at 0.6 tonnes of oil equivalent is still a third of the global average of 1.8 tonnes of oil equivalent.
Rooting for Gas
Tripathi points out that we need to create demand for gas. It is a benign fuel, has huge environmental benefits but comes at a premium. Our purchasing power is lower than the west, but the benefits that gas provides in the form of reduced health costs and higher energy output are much higher. "The big problem is convincing people to opt for gas and pay 10-15 per cent extra for a cleaner fuel," says Tripathi.
With demand not picking up, capacity utilisation at GAIL is just 50 per cent. The pipeline from Mumbai to Goa-Bangalore is running at 10 per cent capacity as there isn't any anchor plant in the region. Tripathi has created infrastructure where it did not exist. He points out that GAIL has spoken to the Karnataka government to convert their buses to CNG. "In Bangalore, there is no order of the Supreme Court like there was in Delhi. In Mumbai, it was done because of environmental activists."
Gas faces the problem of high taxes. While most other fuels such as petroleum coke, coal and furnace oil are under GST, gas is out of the GST regime. While coal attracts 5 per cent GST, petroleum coke and furnace oil are taxed at 18 per cent. Gas is, however, taxed at 25-30 per cent depending on the states. While most states are in favour of bringing gas under the GST regime, states such as Gujarat and Andhra Pradesh are opposing this. "The government needs to make gas more economically attractive for demand to rise," says Tripathi.
Gas demand will rise when the government becomes an enabler and does not raise taxes on gas. Today, there are 2,000 CNG fuel stations across India. The aim is to add 1,000 outlets every year. Of that GAIL, will add 600.
Tripathi points out that the energy sector is growing 4-5 per cent every year and the government needs to push gas rather than coal. He adds that it will be at least 2030 before electric vehicles can make a dent and, therefore, the immediate future is gas.