Royal Dutch Shell and BP seek separation of gas transmission and marketing business of GAIL
PTI reported that amid talk of splitting state-owned gas utility GAIL India, global energy majors Royal Dutch Shell and BP have sought separation of natural gas marketing and transportation business before moving to a unified tariff for pipelines. At an Open House called by the sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) on July 17 to discuss 'unified or pooling' method for computing gas transmission tariffs instead of current postal or distance based transportation rates, GAIL was pitched against formidable combination of Shell and BP on the issue of unbundling.
While Shell sought "legal unbundling of gas trading and transmission business, so that benefit goes to all shippers, BP felt unified tariff "should be done after unbundling of transmission and marketing functions of an entity," according to minutes of the meeting made available by PNGRB.
Shell Energy Marketing & Trading India Pvt Ltd, at the Open House, said it supported the idea of the unified tariff as it will enable development of the market and consequently lead to matured market. It said that if it was not possible to include all pipelines at the initial stage, then all future pipelines should be included. This, however, has to be done subject to "legal unbundling of gas trading and transmission business" and setting up of independent system operator (TSO) as well as online booking of capacity to ensure transparent allocation of capacity, according to the minutes.
BP India supported unified tariff for all cross country interconnected pipelines of all entities and not of a single entity as otherwise, it would create distortion in the transition from entity wise unified tariff. It said that "Unified tariff would lead to an increase in the share of gas in energy basket and development of the market. Unified tariff would help reach gas to far-flung areas and development of gas market to increase the share of gas from current 6.5 per cent to 15 per cent. It would also avoid the cascading impact of tariff and eliminate the differential tariff between the customers nearer to source and away from the source.”
GAIL, on the other hand, said that "Unbundling is not related to the unification of tariff. Unification of tariff is a separate exercise and should be implemented on a standalone basis."
The petroleum ministry is looking at splitting GAIL into two firms to resolve the conflict of interest in it being both the transporter and marketer of natural gas.
Source : PTI