Gujarat Petronet announces 20% reduction in tariff

Vol 7, PW 20 (17 Dec 03) People & Policy

Gujarat State Petronet has raised the stakes in its tariff war with GAIL in Gujarat.

At a meeting with customers in Ahmedabads Taj Residency hotel on 3rd December, Gujarat Petronet made a surprise announcement that it would be reducing its natural gas transmission charges by a hefty 20% from 1st April 2004. Gujarat Petronet is the only company in India that levies a distance based transportation tariff, which currently range from Rs0.15 per mmbtu to Rs0.80 per mmbtu.

At the meeting, PETROWATCH learns Gujarat Petronet head DM Desai said the reduction in price was made possible due to the imminent availability of 1m t/y regassified LNG from Petronet-LNG and the imminent commissioning of the companys 58-km transmission pipeline from Mora to Sajod. Gujarat Petronet is developing an integrated gas grid divided into three phases.

It has already commissioned 208-km of high-pressure pipeline of its 525-km Phase I state gas grid. Unlike GAIL, which passes on the cost of service of about Rs0.40 per mmbtu to customers over and above its transportation charge, Gujarat State Petronet says it has decided not to levy any extra charges.

This is our business model, reveals a source. GSPL does not mind competing with GAIL and is comfortable offering such tariffs.

GAIL is not the only company worried at Gujarat Petronets new strategy. Alarm bells are also ringing at British Gas subsidiary Gujarat Gas over Desais announcement that the Mora to Sajod pipeline will be commissioned in May 2004.

Today, Gujarat Petronet uses the Gujarat Gas-owned Hazira to Ankleshwar pipeline to transport gas to its customers but after May 2004 it will switch to the Mora to Sajod pipeline. Gujarat Gas is convinced that such a move will make the Hazira to Ankleshwar pipeline redundant.

Gujarat Petronet disagrees: Its wrong to say that we will kill the Hazira to Ankleshwar pipeline, reveals a source. It cannot handle volumes of more than 4.5m cm/d while our requirement is much more at 15m-16m cm/d.

He adds that the Mora to Sajod pipeline will operate at 90-bar while the Hazira to Ankleshwar pipeline operates at only 50-bar pressure.