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Panel to decide on gas transmission tariff of GAIL

Richa Mishra
Ambarish Mukherjee

New Delhi , Feb. 27

The inter-ministerial group (IMG) will take a final decision on gas transmission tariff of GAIL (India) Ltd applicable for Hazira-Vijaipur-Jagdishpur (HVJ) pipeline.

The Government has decided to refer the recommendation of the Tariff Commission, which was tasked to review the gas transmission tariff of GAIL after the fertiliser industry complained of high transmission costs.

Official sources said the Tariff Commission had made a presentation before the Petroleum and Fertiliser Ministries in November last year suggesting reduction in tariff. GAIL was also present at the meeting.

The Tariff Commission has since reviewed its suggestions, and indications are that there could be change in the proposal.

According to sources, the commission has now come out with cost of service method of tariff calculation.

It is learnt that the final recommended tariff is close to the current tariff of GAIL of Rs 1,150 per thousand standard cubic metre (SCM). GAIL's current tariff of Rs 1,150 per thousand SCM, or roughly 60 cents per million British thermal unit (mmBtu), over a 20-year period is arrived at after `levelising' the tariff uniformly over a 20-year period.

Reduction in margins

In other issue the Commission has suggested a marginal reduction in the marketing margins charged by GAIL. Further, the Tariff Commission has also recommended reduction in the connective-cum-distribution tariff charged by GAIL for Agra-Ferozabad sector.

A senior Fertiliser Ministry official said the Ministry was trying to see a framework where one could know reasonably over a period of five years what is the quantum of gas available to the fertiliser industry and the price band, so that it can plan how to put up at least another 5 million tonnes of additional urea capacity by the end of 11th Plan (2011-12).

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