GAIL demands TSA from IOC and BPCL

Vol 7, PW 1 (26 Mar 03) People & Policy

GETTING SHASTRI Bhawan to force state-owned oil companies to work with each other used to be easy.

Not any more, thanks to the deregulation of the domestic petroleum retail market. Now they're out in the market fighting each other for market share and openly resist attempts by Shastri Bhawan to shackle them.

Against this background, the Vizag-Secunderabad LPG pipeline looks set to end up as GAIL's sole burden. No wonder GAIL wants Shastri Bhawan to force IOC and BPCL to sign TSAs.

Luckily, GAIL is on strong ground. It has in its possession two Shastri Bhawan letters, one each in February and June 2001, setting the tariff for the pipeline and asking the three oil PSUs to sign TSAs on a "priority basis" by March 2001.

By September 2001 GAIL only had a TSA from HPCL but went ahead with the pipeline anyway expecting the other two TSAs to happen in due course. GAIL is now panicking: the pipeline is almost ready and IOC and BPCL still refuse to sigh a TSA.

Warns GAIL: "This pipeline if not utilised effectively can become non-performing asset. It would be in the greater national interest that the asset is utlilised efficiently and adequately." But neither IOC nor BPCL are buying GAIL's arguments.

Confirms an IOC source: "Yes, we did give commitments to GAIL but they were subject to certain conditions. The days of the OCC were different.

Where is the OCC now" IOC and BPCL reckon it is uneconomical for them to use the GAIL pipeline to transport LPG to their bottling plants in the region. "Why should we use the costlier option Who will reimburse us the difference in cost As it is, we have no support from the government for the LPG subsidy."