Prime Minister Narendra Modi’s administration is considering a plan to spin off the gas transmission business of GAIL India Ltd., the nation’s largest gas utility, into a separate unit, according to people with knowledge of the matter.
The oil ministry is seeking approval from the cabinet for splitting the transmission business from the gas marketing operations, the people said, asking not to be identified as the matter is not public. GAIL has appointed an international consultant to determine tax implications after the restructuring, they said. Oil ministry spokesman declined to comment, while a GAIL spokeswoman didn’t respond to email seeking comment.
The plan to carve the pipelines business into a fully-owned unit will bring greater transparency between the two businesses and may allow the government to sell shares at a later date. GAIL owns two-third of India’s operating gas transmission network, and the pipelines operation accounts for close to 40% of its earnings.
The government is seeking to keep the pipeline business separate for GAIL to help the company focus on expansion of its network and, at the same time, be transparent in offering the infrastructure to all.
GAIL’s pipeline network runs over 6,800 miles across the country and the company is investing about $10 billion is expanding the network. The company has also started a web portal for online booking of gas transportation capacity.