IndianOil joins chorus against single gas tariff

Vol 23, PW 22 (10 Sep 20) Midstream, Downstream, Renewables

IndianOil has reinforced its earlier objection to the PNGRB's proposal for a unified gas transmission tariff with figures to back up the negative impact on its business.

IOC sources tell this report they fear additional expenditure of more than Rs1000cr ($133m) at just three refineries if the PNGRB pushes through its proposal: Koyali, Mathura and Panipat. IOC owns and operates nine refineries and consumes more than 2m t/y R-LNG.

"This will increase to almost 3m t/y because of the expansion of established refineries and the connection of the other refineries to gas networks," says a source. Most of IOC's refineries fall under Zone-1 under the PNGRB proposal which covers 0-300-km from the point of gas injection.

Like OPaL, IOC argues this band is too broad. IOC wants more zones, so factories that are 10-km from the gas source do not pay the same price as those that are 300-km away.

IOC is also worried that a single gas tariff would hit new LNG terminals like its Ennore terminal commissioned in March 2019. "Both Dahej (17.5m t/y) and Hazira (5m t/y) terminals are more than 16 years old and have recovered most of their investment," adds our source.

"Because of this, both these terminals have considerably lower regasification charges compared to new upcoming terminals." IOC fears the investments made in new terminals will become unviable in the first few years if the PNGRB introduces a unified gas tariff.