No one wants to antagonise GAIL in CGD business

Vol 9, PW 19 (12 Jan 06) People & Policy

Like other states entering the emerging CGD business Rajasthan too faces a dilemma over how to deal with GAIL.

GAIL has not done any significant (CGD) work all these years in Rajasthan even though the HBJ passes through the state, says a Jaipur source. Its arguments do not carry much weight.

Local authorities tell us they believe GAIL wants to retain its near monopoly in the gas business and obstruct competitors and that by completely acceding to GAILs demands, the states larger and long-term interest of developing a CGD network and boosting gas-based industrialisation will not be served. But Rajasthan is also aware that it makes no sense antagonising GAIL.

You have to work with GAIL in some form or the other, we hear. Theres no escape from that; it has the longest network of cross-country transmission pipelines in the country and is also a PSU.

Rajasthans dilemma is compounded by the absence of an independent oil and gas regulator. Says an industry source: Rajasthan is entering the CGD business; it does not want to do anything that could bring it into conflict with the oil ministry.

Lack of clarity also centres on how best to proceed. Some believe Rajasthan like Gujarat - should set up a transmission and distribution company, either alone or in a joint venture with a private company.

Once this infrastructure is in place, nobody, least of all GAIL, or the oil ministry, can wish it away. Others believe it should wait for parliament to enact the long-pending Petroleum and Natural Gas Regulatory Board Bill.

Rajasthan is also closely watching moves by Uttar Pradesh, Haryana and Maharashtra to develop CGD networks through licences to private companies. In these states too, GAIL is naturally uncomfortable watching the private sector encroach on a business it once dominated.

LNG Summit