GAIL chairman. B.C. Tripathi. The firm  posted a near fourfold jump in March-quarter net profit on a one-off impairment it had taken on its investment in Dabhol LNG terminal a year ago. Photo: Ramesh Pathania/Mint
GAIL chairman. B.C. Tripathi. The firm posted a near fourfold jump in March-quarter net profit on a one-off impairment it had taken on its investment in Dabhol LNG terminal a year ago. Photo: Ramesh Pathania/Mint

GAIL India backs unbundling of its ops, but only after gas market matures

GAIL says it is the only company in the country that has built multiple gas pipelines in the past one decade while the private sector even after getting authorization has not laid an inch

New Delhi: Facing a prospect of being split into two, GAIL India Ltd on Thursday said it supports reforms such as unbundling of gas marketing and transportation business but such a move globally has been done only after gas market has matured.

In a point by point rebuttal to critics, its chairman and managing director, B.C. Tripathi, said GAIL is the only company in the country that has built multiple gas pipelines in the past one decade while the private sector even after getting authorization has not laid an inch.

Also, it has thrown open all of the 11,400-km of pipeline length to third parties for accessing on common carrier basis, he said.

In mature markets, monopoly gas transporting and marketing companies have been unbundled or split after the share of natural gas in energy mix has reached at least 15% and a well-connected pipeline network built.

Also, domestically produced natural gas forms bulk of consumption.

In India, the share of natural gas in energy mix is 6.2%, its eastern and southern parts are not connected to any pipeline and domestically produced gas makes up for just 40% of the consumption.

The petroleum ministry is looking at splitting GAIL into two firms to resolve the conflict of interest in it being both the transporter and marketer of natural gas.

While the ministry feels it hasn’t done enough to lay pipelines, some industry stakeholders have sought access to GAIL’s vast pipeline network for transporting their own gas.

Tripathi replied to both the counts saying that “every inch of the pipeline built in the country in last few years has been by GAIL alone" and 120 entities are already using 25% of the company’s pipelines on common carrier basis.

GAIL also insists that it operates the two business at arms-length principle and hasn’t ever tried to use its monopolistic situation for undue commercial gains.

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