USA and Canada cannot be gas models for India

Vol 7, PW 21 (14 Jan 04) People & Policy

Of the 38 countries where GAIL studied domestic gas transmission and distribution networks, the United States and Canada stand out.

Both are free market economies and in both countries there are several companies operating interstate high-pressure transmission networks. Says GAIL: Particularly in the USA, there are around 44 interstate gas pipeline companies and the market is not only for gas but also for Transportation Capacity Trading.

Theres nothing surprising in this because, with an annual sale of 650bn cubic metres and a total network length of 453,000-km, the US market is by far the biggest of all. However, GAIL argues that India, with its nascent gas market and transmission and distribution systems, cant afford to copy either the US or Canadian models.

Neither of these countries can ever be gas pipeline models for India, continues GAIL. There are inherent deficiencies in the US model, which lead to operational complications, sub-optimal capacity utilisation and wastage of resources.

The most important deficiency is that capacity utilisation in the US gas pipeline network is below 50%, which a country like India with scarce resources cannot afford. GAIL insists that: Practically all other mature markets have refrained from emulating the US model.

By contrast, Indias gas market is very much in the developing stage and with gross annual gas sales of only 27bn cubic metres supplied through a network of about 5,000-km of pipeline, the US model appears to be quite unsuitable for replication in India.