GAIL India Ltd., the nation’s biggest gas utility, is in talks with Indian steel mills to convince them to switch to using the less polluting fuel in an attempt to revive sales growth. The shift to gas will mean a sweeping transition in a country that depends largely on oil and coal for energy.
The New Delhi-based company is counting on the global push for factories to seek less polluting fuels to drive that change, Ashutosh Karnatak, director of projects at the state-run utility said in an interview.
For GAIL it’s crucial to find new clients as demand from its biggest customers – power plants – wanes. The company has the backing of Prime Minister Narendra Modi, who has set a goal to reduce the emissions intensity of the economy as well as curb the severe air pollution that chokes large swathes of the country’s urban landscape. Modi is pushing for a gas-based economy, where the fuel is seen more than doubling its share in the energy mix to 15 per cent by 2030.
“There is a lot of pressure on these industries because of climate change and we are offering them a solution to convert to gas,” Karnatak, who calls GAIL a “gas warrior,” said. “Oil use can’t be wiped out, and neither can be coal. But we want gas and renewables to increasingly replace the dirty fuels.”
Reaching the target would require India’s daily gas consumption to increase to 450 million standard cubic meters from about 150 million, Karnatak estimates. That’s a daunting task for a country with inadequate pipeline infrastructure and customers who are sensitive to prices.
Still catching up!
India’s power utilities are instead using more coal. They bought a record 608 million tons of the fuel in the year ended March, 8.4 per cent more than a year earlier, government data show, while gas use dropped.
GAIL’s revenue is poised to drop 19 per cent in the year ending March 31, according to median estimate of seven analysts surveyed by Bloomberg.