Indian Oil opposes GAIL’s unified tariff pitch for gas transmission: Report

New Delhi, Jul 27: Indian Oil Corporation (IOC) has opposed natural gas firm GAIL’s pitch for a unified tariff for its pipelines, according to a report.
The state-run refiner said that such a move would raise input cost for its three refineries at Koyali, Mathura and Panipat by Rs 1,000 crore, and will only help operators of old liquefied natural gas terminals and pipelines.
Other refiners, including BP and Shell, however, supported the idea of a unified tariff, saying it will help develop the market and raise the share of gas in India’s energy basket.
They, however, prescribed a few conditions, including a separation of GAIL’s natural gas transportation and marketing business before shifting to a unified tariff.
BP supported unified tariff for all cross-country interconnected pipelines of all entities and not of a single entity, stating that entity-wise unified tariff would create distortion in transition.
The company said it should be done “after unbundling of transmission and marketing functions of an entity”.
Shell demanded that the unified tariff have an “independent system operator, uniform code of conduct, and an online booking of capacity to ensure transparent allocation of capacity”.
Last year, the Petroleum and Natural Gas Regulatory Board (PNGRB) had put up a consultation document on unified pipeline tariff, proposing a 60 percent hike in tariff by the company.
The regulatory body, however, is reportedly debating moving to a unified method for computing gas transmission tariffs that would end the current distance-based tariff.
On July 17, the PNGRB had called an open house on the matter, where several gas suppliers and consumers submitted their views. The proposed unified tariff is aimed at increasing penetration of gas in far-flung areas.
According to the report, this method would raise tariff for customers closer to the source of gas and lower the cost for far-off customers.
GAIL has argued that unified tariff will encourage those located in distant locations to consume gas and lead to the development of a local gas market. This would also help in raising the utilisation of GAIL’s pipelines and expanding infrastructure.