PNGRB slashes GAIL's tariff for pipeline by 57%

GAIL, which had sought a tariff of Rs 27.73 per mmBtu for Dadri-Bawana-Nangal pipeline, will now get Rs 11.85

Oil regulator PNGRB has cut state-owned gas utility GAIL India Ltd's transportation tariff for the Dadri-Bawana-Nangal pipeline by over 57% to Rs 11.85 per million British thermal unit.

GAIL had sought a tariff of Rs 27.73 per mmBtu for the Rs 2,202.67 crore Dadri-Bawana-Nangal pipeline with a capacity to carry 31 million standard cubic meters of gas per day.

The Petroleum and Natural Gas Regulatory Board (PNGRB) in its July 12 order made changes in the pipeline operating days, volumes and inflation rate considered by GAIL in proposing a tariff of Rs 27.73 per MMBtu. It also removed capital expenditure of Rs 365.54 crore for the spurline built from Panipat to Amritsar as "unsubstantiated capex".

The reduction in transporatation tariff would benefit National Fertilisers Ltd (NFL) and several other gas-based projects that would be served by the pipeline and its spur lines in Punjab, Haryana and Uttar Pradesh.

While the line is of 335.5 km length, GAIL has built another 309-km in spur lines to Roorkee, Haridwar, Rishikesh, Dehradun and to Ludhiana.

"The provisional initial unit natural gas pipeline tariff on levelized basis determined by the Board shall be Rs 11.85 per mmBtu for Dadri-Bawana-Nangal natural gas pipeline network with effect from January 4, 2010 ie date of commissioning of pipeline," the regulator said in the order.

It said the difference between the tariff charged and that approved by the Board shall be adjusted with customers.

"GAIL has taken inflation at the rate of 5% in their submissions whereas the Board has decided to consider inflation at the rate of 4.5% on a conservative assumption," PNGRB said in its order.

Also, while GAIL has taken operating days of 345 days, the Board has adopted operating days as 355 days.

"The apportionment of the levelized tariffs over all the tariff zones with detailed calculations will be submitted by the entity (GAIL) for Board's approval within 10 days of the issue of the order," PNGRB said in the order.