GAIL told to cut supply fee for Dahej-Panvel line

Instead of getting the 53 per cent rise in rates it had sought for supply along the 581 km Dahej-Uran/Dabhol-Panvel pipeline, GAIL has been told to reduce it by 6 per cent.

The existing rate is Rs 26.14 per mBtu and GAIL, the biggest transporter of natural gas in the country, had asked the Petroleum and Natural Gas Regulatory Board to allow it to charge Rs 40.16 per mBtu. Instead, the Board has approved Rs 24.49 per mBtu. The company will now have a hit of around Rs 50 crore, in adjustments to the customers of 13 million standard cubic metres per day of gas for the difference of Rs 1.65 per mBtu since November 20, 2008. These are primarily consumers in the power and fertiliser industry.

The 2008 regulations require an entity to carry out adjustments with retrospective effect with customers for the difference in rates. “The tariff (rate) finalised by the Board is much lower than what was proposed by GAIL and it will impact the bottomline,” said Rakesh Jain, general manager (energy division), at Feedback Ventures. A GAIL spokesperson said the impact would be “marginal”.

“While GAIL’s proposal was based on the concept that all zones across the pipeline should have the same tariff, the Board has taken a zonal basis. GAIL has submitted a single postalised tariff for the entire pipeline, which is not in consonance with the spirit and objective of regulations, which stipulate a distinct tariff for each zone,” said a Board official.

The reduction by the Board has been done on account of change in the inflation rate from 5 to 4.5 per cent, increase in the number of working days from 345 to 355 days, exclusion of accounted gas, etc.