GAIL

[New Delhi, September 26, 2008]

GAIL (India) Limited

Ratnagiri Gas & Power Private Limited

RGPPL - Power Generation to double by first week October

LNG Terminal to be commissioned by early 2009

New Delhi, September 26, 2008:- Shri R.K. Goel, Chairman of Ratnagiri Gas & Power Private Limited (RGPPL), on the conclusion of the third Annual General Meeting of the Company held today, stated that the Company is fast moving on the revival path. The power generation is expected to double by the first week of October 2008, from the current level of about 620 MW. The steam turbine of power block III would be put on stream and the power block would be generating about another 600-620 MW. This will ease the shortage of power situation in the state of Maharashtra. One gas turbine each of power block I and II are expected to be revived by the end of this year, when all the six gas turbines and three steam turbines would be on stream.

LNG FACILITIES

Construction of marine and non-marine works of LNG terminal is in progress. Pre-commissioning activities of various systems has commenced. Tank 300 is ready to receive LNG and Tank 400 is in the advance stages of completion. All the major marine related Contracts, except break water and capital dredging, have been awarded and the Company is targeting to bring commissioning-cargo of LNG in the early part of the year 2009. The LNG terminal without breakwater would be operational soon. It is expected that the breakwater would be commissioned by 2011.

SOURCING OF LNG

The sourcing of LNG and execution of a long term fuel supply agreement remains a matter of concern. Efforts for a long term tie-up are being made by the Government of India, Ministry of Petroleum & Natural Gas through GAIL and Petronet LNG Ltd. (PLL). In the meantime, GAIL has commissioned the pipeline project from Panvel to Dabhol for transportation of regassified LNG from PLL’s Terminal at Dahej and the Project started getting RLNG from 23rd July 2007.

REVIVAL COST

The revival cost of Rs. 8,700 million, estimated at the time of take over of assets, has now been estimated at Rs. 23,640 million and in view of this increase, financial restructuring of the Project, in terms of the Common Term Loan Agreement, is under consideration of Lenders/ Government of India.

PROFIT & LOSS ACCOUNT

During the year 2007-08, the Company has achieved a turnover (Including other income) of Rs. 10,840 million (previous year Rs. Nil) and operating profit before interest and depreciation was Rs.3,862 million. Due to operation of power blocks only during part period in the year and low capacity utilization, the Company incurred a net loss of Rs. 153 million (previous year Rs. Nil) after providing for interest and depreciation.

FINANCING FOR REVIVAL ACTIVITIES

RGPPL was sanctioned a term loan of Rs.14,000 million by Power Finance Corporation Limited (PFC) in January 2006, to meet the expenditure on revival/completion of the Project. Disbursement of Rs. 8,200 million has already been made. A sum of Rs. 3,000 million is likely to be disbursed shortly. For this disbursement, Government of Maharashtra is in the process of issuing a guarantee. This amount would be utilized for revival of power blocks and procurement of mandatory spares.