GAIL sees gas sales returning to pre-Covid-19 levels by quarter end

State-owned gas utility GAIL India Ltd sees its gas demand returning to pre-COVID-19 levels by the end of the current quarter as the expansion of the city gas network will offset shrinking consumption, its Director (Marketing) E S Ranganathan said on Thursday.

GAIL, the country's largest natural gas marketing and transporting company, sold about 113 million standard cubic metres per day of the fuel before the outbreak of the pandemic.

"We (GAIL) have come back to more or less 95 per cent level," he said at FIPI's Young Professionals Forum. "It is going to come back to 100 per cent level by the end of this quarter."

GAIL saw gas demand almost halving when a nationwide lockdown was imposed beginning March 25 to contain the spread of coronavirus. Industries that used gas as feedstock shutdown and CNG-run buses and vehicles went off the road.

But with the restarting of economic activity and unlock phases that began in May and June, the demand started coming back, he said adding GAIL is currently selling gas at almost 95 per cent of pre-COVID-19 levels.

The most prolonged reduction in gas demand came from the city gas distribution sector that sells CNG to automobiles, piped cooking gas to households, and provide fuel to hotels and other industries in towns.

Ranganathan said the reduction in demand in existing city gas networks would be offset by new demand from newer areas where the network is being expanded now.

City gas networks are mostly concentrated in Delhi, Gujarat, Mumbai and a few other cities and licences have been given to roll out the same in other areas.

"As many as 475 CNG stations and 1 lakh households were added last fiscal and the same trend is likely in current fiscal," he said. "The demand destruction will be offset by an increase in geographical reach."

He said gas consumption for the industry as a whole is likely to return to normal by the end of the financial year.

"GAIL will see its gas sales returning to pre-COVID levels by end of the quarter and for the industry as a whole it will be by the end of the financial year," he said.

Speaking at the same forum, Hindustan Petroleum Corp Ltd (HPCL) Director (Refineries) Vinod S Shenoy said "huge demand destruction" of liquid fuels such as petrol, diesel, and ATF happened after lockdown.

Demand fell by as much as 70 per cent but after unlock and lifting of restrictions, it has come back to 72-80 per cent.

"We expect demand going up to 90 per cent in the fourth quarter (of current fiscal)," he said.

Sales of petroleum products in May 2020 were 77 per cent compared to May 2019 and sales in June 2020 were about 91 per cent as compared to June 2019.

However, with some states re-imposing lockdowns, the demand for all petroleum products has fallen to 80-82 per cent.

For reaching pre-COVID-19 level public transport and offices will have to resume. Also, theaviation sector has to return to normal.