Oil regulator hikes tariff of pipeline transporting Reliance gas by 37%, half of sought

Oil regulator PNGRB has approved a 37 per cent rise in tariff from April 1 for the pipeline that transports Reliance Industries' eastern offshore KG-D6 gas to customers.

In its final tariff order, the Petroleum and Natural Gas Regulatory Board (PNGRB) in a March 12 order said transporting natural gas on the East-West pipeline would cost Rs 71.66 per million British thermal unit (mmBtu) on gross calorific value (GCV) basis from April 1 as compared to Rs 52.33 per mmBtu tariff charged for April 1, 2009, to March 31, 2019, period.

The tariff approved is almost half of the tariff sought by East West Pipeline Ltd - the operator of the pipeline. It had sought the tariff to be raised to Rs 151.84 per mmBtu with effect from April 1, 2018.

A rise in tariff would lead to increase in the price of fertiliser as well as city gas like CNG that uses gas brought through the pipeline starting from Kakinada in Andhra Pradesh and running up to Bharuch in Gujarat.

The pipeline primarily transports KG-D6 gas, which has steadily dipped from 69.43 million standard cubic meters per day achieved in March 2010 to under 3 mmscmd.

PNGRB in a 49-page order went into cost calculations and other parameters to fix the tariff.

"The tariff has been worked out based on information provided by the entity and deliberations. However, PNGRB intends to verify/audit the information provided for tariff determination and method of cost allocation, etc. by an internal team of PNGRB or by an external agency," the order said.

The tariff, it said, will be subject to revision based on the audit of information and data.

Originally, EWPL had proposed a levelised tariff of Rs 55.91 per mmBtu for transporting the gas beginning April 1, 2009 but PNGRB fixed a provisional tariff of Rs 52.53 per mmBtu.

The company in October 2017 proposed a final tariff for the pipeline at Rs 78.72 effective from April 1, 2009, till the end of the economic life of the pipeline - up to March 31, 2034.

When PNGRB sought clarifications, EWPL updated the tariff filing to state that Rs 52.23 per mmBtu would be the tariff till 2017 and Rs 151.84 would be charged from 2018-19 to 2035-36.

The PNGRB order said the pipeline operator has claimed a total capex of Rs 18,307.37 crore under two heads - actual capex of Rs 16,347.96 crore and future capex of Rs 1,959.41 crore.

PNGRB said when it first fixed the provisional tariff, it had assessed the pipeline's carrying capacity of 85 million standard cubic metres per day including 21.25 mmscmd for use on a common carrier, open access and non-discriminatory basis by any third party.

But the company challenged this first before the Appellate Tribunal of Electricity (APTEL) and then before the Delhi High Court. The Court had in April last year ordered fixing of the tariff once the quorum of PNGRB was complete.

PNGRB became fully functional a year back when the government made appointments of Chairman and members of the Board.

PNGRB sought views of stakeholders on EWPL's tariff filing and gave a detailed order after considering all views.