GAIL accused of blocking competition by PNGRB

Vol 19, PW 26 (08 Sep 16) Midstream & Downstream

Once again GAIL's controversial dual role as gas seller and transmission company is under attack, this time from the PNGRB which accuses it of blocking competition and abusing its 'monopoly position' by forcing Gujarat State Petronet to reserve capacity in its pipelines on a 'firm' basis.

In a detailed 41-page order with major repercussions on the future of the gas transmission business, the PNGRB has ordered GAIL to pay a Rs1 lakh ($1500) penalty by September 30. This order was issued unanimously on August 30 by all three PNGRB members - KK Jha, Subhash Chandra and Basudev Mohanty - after the Supreme Court referred the case back to the gas regulator in January this year.

Three years ago Gujarat Petronet complained to the PNGRB that GAIL was not allowing it to access and reserve common carrier capacity in the DVPL-GREP (Dahej to Vijaipur pipeline and Gas Rehabilitation and Expansion Project) and the DBNPL (Dadri-Bawana-Nangal) pipelines on a 'reasonable endeavour' basis or as and when gas is available. Gujarat Petronet accused GAIL of restrictive trade practices by forcing it to reserve capacity only with a 'ship and pay' commitment that forces it to use the pipeline as committed or pay a penalty.

"We had to approach the regulator because GAIL's attitude towards us is discriminatory, restrictive and unfair," a Gujarat Petronet source tells us. "The PNGRB has rightly said GAIL is abusing its dominant position."

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