Calcutta, June 6: Gail (India) Limited has sought a market-determined tariff fixation system for natural gas transmission through grid pipelines.

In the recently announced Gas Pricing Order, the government has approved a market-related pricing mechanism for gas sold to customers other than those in the power, fertiliser and transportation sectors, the Agra-Ferozabad region and small consumers.

In line with the principle of adopting a market-determined price for gas, it would be appropriate to consider adoption of a market-determined transmission tariff methodology also.

The determination of tariff for the existing gas grid pipelines in the country namely, Hazira-Bijapur-Jagdishpur and Dahej-Vijaipur pipelines, has already been referred to the Tariff Commission.

To understand global tariff fixation practices, Gail have also conducted a study of international practices adopted by developed countries such as the UK, the US, Canada, Australia and others.

The findings of the study have been shared with the Tariff Commission to help it deciding and recommending a sound tariff methodology.

The study focussed on the key elements in tariff determination such as economic life, depreciation, rate of return and the methodologies adopted by regulators in developed gas markets.

The practice followed in India by the Planning Commission on these key elements has also been shared with the Tariff Commission.

While determining tariffs for other sectors, the government has considered fair rates of return ? 14 per cent for power, 12 per cent for fertiliser and 15 per cent for investments in upstream production.