PNGRB may allow pipeline firms to cut rates

Gas transportation companies such as GAIL and Reliance Gas Transportation Infrastructure Ltd (RGTIL) may soon be able to charge a lower rate than that determined by the Petroleum and Natural Gas Regulatory Board (PNGRB) or those earlier approved on a cost-plus basis.

However, the new transportation rate would have to be non-discriminatory, is the idea. “We have initiated deliberation on the need to allow flexibility to all transporters to charge a gas pipeline at a level lower than that determined or approved,” said a Board official.

The Board has proposed amending the PNGRB (Determination of Natural Gas Pipeline Tariff) Regulations, 2008, and has invited comments from stakeholders and experts. The issue came up in a pre-bid conference for pipelines and some bidders had wanted to know if they could offer a rate lower than what was determined by the Board.

There are two major pipeline companies in the country. GAIL, the biggest gas marketing company, operates 7,847 km of high-pressure trunk pipeline, with a capacity of 157 million standard cubic metres of gas (mscmd) per day across the country. Reliance Industries, the country’s biggest gas producer, operates the 1,440-km, east-west pipeline (EWPL), the longest in the country, from Kakinada in Andhra to Bharuch in Gujarat.

The gas transportation business is set to see the entry of more companies. The state sector oil marketing companies — Indian Oil, Hindustan Petroleum and Bharat Petroleum — have partnered with Gujarat State Petroleum Corporation (GSPC) for doing so. The consortium recently emerged as the preferred bidder, outpacing major companies which included GAIL, for the Mallavaram (near Kakinada)-Bhopal-Bhilwara (Rajasthan)-Vijaipur (near Guna in Madhya Pradesh, Mehsana (Gujarat)-Bhatinda (Punjab), and, Bhatinda-Jammu pipelines. PNGRB is yet to formally declare the consortium as the winner, due to a Supreme Court order.

According to an industry source, one reason for the move on allowing a lower rate may be to facilitate a market response to the evolving gas market, allowing the transporter some flexibility.

The GSPC-led consortium’s rate for the Mallavaram-Bhilwara pipeline upto Vijaipur is learnt to be comparatively lower than the combined rate of EWPL and GAIL’s HVJ pipeline up to Vijaipur. It is expected that this may entice more consumers in North India to switch to the GSPC consortium’s line, once it is commissioned, from the EWPL-HVJ one.