The Telegraph
Since 1st March, 1999
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Cooking gas fuels tension

Mumbai, Oct. 6: The decision of Gail India Ltd (Gail) and Oil and Natural Gas Corporation to venture into retail marketing of liquefied petroleum gas (LPG) has sent some sections of the oil industry running for cover.

In a recent presentation to the ministry of petroleum and natural gas, oil companies highlighted their apprehensions about the move to grant LPG marketing rights to Gail India and ONGC. The oil marketing companies pointed out that while they have developed infrastructure facilities believing that Gail or ONGC would not venture into retail marketing of LPG, the entry of the two now will mean breaking the core area demarcation concept.

Further, since the cost of production for Gail/ONGC is much lower compared with refinery production due to the cost differential for raw material (natural gas and crude oil), it would give them an unfair edge.

Of the two, while Gail has already sought the Centreís permission to market LPG to domestic customers as part of its efforts to tap allied activities in the sector, ONGC officials said the corporationís plans on this front are only at a nascent stage.

At a recent news conference, chairman and managing director Proshanto Banerjee justified Gailís decision to enter retail LPG distribution, stating that it produces one million tonnes of LPG directly from natural gas and that the company was also interested in marketing the gas to bulk industrial customers.

Whatís more, the PSU oil marketing companies have invested a considerable amount on tap-off points along Gailís Jamnagar-Loni pipeline which transmits over 1.3 million tonnes of LPG. They now fear that these tap-off points would become idle if Gail and ONGC don their new mantle of producer and marketer rolled into one.

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