Saturday, August 13, 2022

GAIL not part of any disinvestment plan, says Petroleum Secretary

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  • The only thing being done — there was also a budget announcement about it — is that an independent TSO will be set up, said the Secretary

  • The government had earlier been planning on separating the marketing business of GAIL from its pipeline business

New Delhi: Clearing the air on the government’s disinvestment plan, Petroleum Secretary Tarun Kapoor has categorically said that state-run GAIL (India) Ltd is not part of any disinvestment plan. In an interview to The Economic Times, the Petroleum Secretary said, “GAIL is not part of any disinvestment plan. The only thing being done — there was also a budget announcement about it — is that an independent TSO will be set up.” The government had earlier been planning on separating the marketing business of GAIL from its pipeline business.

Minister for Petroleum and Natural Gas Dharmendra Pradhan had said in an interview in May 2020 that that the plan for unbundling the pipeline and the marketing arms of GAIL (India) Limited is something that the Centre is pursuing and it is in line with the government’s policy of privatisation and mergers in the public sector. “In order to make GAIL more competitive and to increase its credibility, the government has been working on a plan to split its pipeline and marketing arm,” Pradhan had said.

Change in plans on GAIL disinvestment

However, there has been a change in plans. According to media reports, the government shelved the bifurcation plan because there was a realisation that GAIL’s ambitious plan to double its gas pipeline network to 34,000 km will be impacted because the bifurcation will hinder the company’s ability to borrow funds. Quoting sources, the media report that came out in February this year, said that the bifurcated entity (GAIL subsidiary) will not be able to raise funds at rates which a combined balance sheet of GAIL would be able to do.

And creating gas pipeline infrastructure is crucial to the government’s plan for creating a gas-based economy. 

TSO will dismantle monopoly over gas pipelines: Secretary

While pointing out that there has currently been some amount of criticism from the industry as 70 percent of the trunk gas pipelines are currently owned by GAIL, the Petroleum Secretary said, “GAIL is also a trader and is the biggest supplier of gas in India. So it has a monopoly over the pipelines.” He said this necessitated bringing in an independent Transmission System Operator (TSO).

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“When the TSO comes up, whatever spare capacity is available in the pipe network will be made available to anyone who wants to buy or sell gas. That would also help in import of LNG. Besides, it will help in the area of domestic manufactured gas which can then be sold across the country,” said Kapoor. The TSO’s function will be to look after the capacities that are available in the trunk pipeline network. The independent body will help all types of traders to transport their gas without any monopoly dominating the networks, the top bureaucrat in the Ministry of Petroleum and Natural Gas said.

“This is something we are moving towards, and it should happen soon,” he added.

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