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GAIL has sent pipeline monetisation plan to Centre; may launch InvIT in FY22: CMD

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  • To set the ball rolling, GAIL has planned the monetisation of two of its pipelines initially

  • The InvIT may involve selling a 10-20 percent stake in these pipelines, said the GAIL CMD

New Delhi: GAIL (India) Ltd Chairman and Managing Director Manoj Jain has said that the company has sent a plan for monetising two of its pipelines through Infrastructure Investment Trust (InvIT) to the Ministry of Petroleum and Natural Gas. If approvals come, the InvIT may be announced in this financial year itself, Jain told the media during a press interaction on Wednesday. The news comes in the backdrop of the government scrapping the plan to bifurcate GAIL.

In her Budget speech in February this year, Finance Minister Nirmala Sitharaman had announced the government’s plan to monetise pipelines of GAIL and oil retailers like Indian Oil and HPCL, through InvIT. In line with this decision, GAIL is looking to monetise minority stakes in its pipelines through InvIT.

GAIL to monetise Dahej-Uran-Panvel-Dabhol & Dabhol-Bengaluru pipeline

To set the ball rolling, GAIL plans to monetise the Dahej-Uran-Panvel-Dabhol pipeline and the Dabhol-Bengaluru pipeline, said Jain. The InvIT may involve selling a 10-20 percent stake in these pipelines initially, said the CMD. “Once the ministry clears the proposal, it will go to the Cabinet and if approvals come in time, the InvIT could be launched within the current financial year,” he added.

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Through InvIT, GAIL will look to transfer pipelines with a steady revenue stream to a trust, whose units can be sold to investors and traded on the stock exchanges. The proceeds from the InvIT will be used by GAIL to further strengthen the gas pipeline network in India for building a gas-based economy. The government has placed a lot of policy thrust on raising the share of natural gas in the Indian economy from the present 6 percent to 30 percent by 2030. 

The backdrop

GAIL is the biggest natural gas marketing and trading company in India and owns nearly 70 percent of India’s gas pipeline network, which gives it a stranglehold over the market. In the wake of requests received from industry stakeholders who had expressed concerns over the monopoly enjoyed by GAIL in the sector, the government had decided to bifurcate GAIL and hive off its pipeline business into a separate entity. However, that idea was scrapped later. Media reports claimed that the proposal was dropped as the development of gas pipelines in remote areas with low demand would have to be undertaken by GAIL and if bifurcated, a subsidiary will not be able to raise funds at rates that a combined balance sheet of GAIL would be able to get. In order to address the concerns raised by the industry, the government has decided to set up an independent operator for common carrier gas pipelines.

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