As part of its diversification drive, the Gas Authority of India (GAIL) is planning to add another 10,000km of optic fibre network to its existing 8,000km, to connect 73 cities at a cost of Rs 2.4 billion.

This project will follow closely the schedule of National Gas grid''s completion, which is estimated to cost Rs3 billion. The optic fibre network will cater to demand for national long distance capacity on leased basis to private long distance telephony providers such as VSNL, Tata Teleservices, etc. Apart from this, it will be used for their internal requirement for running the SCADA network . The company is also planning to increase polymer capacity in FY05 by 50,000 tonnes. The petrochemical complex at Pata is being expanded in two stages and the company plans to sell up to 15 per cent of the LPG produced to bulk customers, as the current market realisations on bulk sales are higher than what is being sold to PSU marketers.

As part of its effort to increase access to gas supplies, GAIL, in consortium with ONGC and other PSU''s, has taken a stake in 12 exploration blocks including one in Myanmar. It plans to invest around Rs2.3 billion in FY05 (Rs 1.0bn in FY04) for exploration of these blocks.

The Myanmar exploration block, which has estimated reserves of around 5-6 tcf, will take between two and three years to develop the field. GAIL has not yet done the feasibility study on whether to bring the gas to India through pipeline or in form of LNG. GAIL has 10 per cent interest in the venture with majority being held by Daewoo, OVL and ONGC.

The company is also looking at gas retailing. On its city gas distribution business, GAIL has plans to set up the distribution, which will include compressed natural gas (CNG) for automobiles and piped natural gas (PNG) for cooking and heating purposes in 22 cities, starting with Pune, Agra, and Hyderabad. GAIL will run this business in line with current structures in operation in cities like Delhi. In retailing GAIL has two operational JV''s in Delhi — (Indraprastha Gas) and Mumbai (Mahanagar Gas) — with BPCL and British gas.