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Firms resent Gail monopoly

New Delhi, Nov. 26 (PTI): Leading energy companies and business lobbies have criticised the government’s plan to make state-run Gail India Ltd the sole transporter of natural gas through pipelines in the country.

Sources, who have access to the comments received by the government on the draft gas pipeline policy, said the industry sees a conflict of interest as Gail is also involved in gas production and gas trading.

British energy firm BG group wants the government to force Gail to give up its gas trading business if it is designated the sole gas pipeline transporter, in order to prevent entry barrier.

The government’s plan has also been opposed by the Royal Dutch/Shell Group, which said there was no need to restrict gas pipeline construction to one player. Energy companies fear a monopoly status would give Gail the power to arbitrarily fix tariffs, although a regulatory body would monitor price movements, they said.

CII in its comments said the plan contradicts the pending Petroleum Regulatory Board Bill that allows companies to build and operate gas pipelines on a common carrier basis.

“Only one public sector undertaking (Gail) carrying out this would lead to inefficiency and high costs,” Assocham stated.

Ficci said the provisions of the policy were in conflict with the New Exploration Licensing Policy (Nelp), which allowed the operator full rights of marketing natural gas produced from the offered blocks, for which pipeline is the efficient and cost effective way of transporting gas from source to demand centres.

The government has, in its draft gas pipeline policy, named Gail as the sole executing agency for all inter-state lines, including the 7,900-km cris-crossing grid. This grid will be the only vehicle for all public and private sector firms to move the fuel from producing fields and import locations on east and west coasts to inland demand centres.

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