Unified tariff structure for gas pipelines to start from April 1

Industrial customers transporting fuel over larger distances to now pay less

More than a dozen gas pipelines that form the national gas grid are on track to come under a unified tariff structure from April 1, a top Petroleum and Natural Gas Regulatory Board (PNGRB) official said on Tuesday.

Based on the principle of ‘one nation, one grid, and one tariff’, the unified tariffs will benefit customers transporting fuel over longer distances and multiple pipelines, PNGRB Board Member A K Tiwari said at the International LNG Conclave organised by the PHD Chamber of Commerce and Industry.

Currently, customers pay additional tariffs for using multiple and inter-connected pipelines. This results in consumers away from the coast paying higher charges as compared to those near it.

To simplify the implementation of unified tariff, the sector regulator introduced entity-level integrated natural gas pipeline tariff.

Under the new regime, buyers will be charged a fixed tariff for the transport of gas over three zones, up from two earlier. This includes transportation of gas within 300 km of a source (gas field or LNG import terminal), 300-1,200 km, and 1,200 km, Tiwari said. 

“The existing tariff of the first zone will almost remain the same. The tariff of the second zone will be less than the additive tariff, and the third will have a tariff which is much less than the additive tariff,” he said.

PNGRB had earlier said the tariff for the first tariff zone will be 40 per cent of the tariff for the second zone.

The government has also incorporated other amendments, such as allowing unaccounted gas, moratorium period, and ramp-up in capacity.

The pipelines that will be part of the unified tariff plan include state-owned gas utility GAIL India-operated Hazira-Vijaipur-Jagdishpur (HVJ) and its supplementary Dahej-Vijaipur line and Dahej (in Gujarat) to Uran-Dabhol-Panvel (in Maharashtra) pipeline.

Reliance Industries’ subsidiary-operated Shahdol-Phulpur line from CBM block in Madhya Pradesh to Uttar Pradesh as well as its formerly owned East-East pipeline from Kakinada in Andhra Pradesh to Baruch in Gujarat would be part of the plan.

Of the 35,000 km of natural gas pipeline that is currently in the works, 23,000 km has been commissioned. As a result, the natural gas mission will go live in the next four-five years.

Kumar, however, stressed that subdued natural gas volumes and under-utilisation of pipelines remain a challenge. “We know the utilisation for any pipeline across the country is around 40 per cent. In some cases, pipelines are utilising around 10 per cent,” Tiwari said. Meanwhile, the capacity utilisation for LNG terminals remains at 50-55 per cent barring few, he added.

WHAT’S NEW

• Number of tariff zones expanded to 3 from 2 earlier
• Existing tariff of the first zone to almost remain the same
• Tariff of the second zone to be less than the additive tariff
• Industrial gas buyers now pay more over longer distances
• Part of move to raise share of gas in energy mix to 15% by 2030