Gujarat Gas wants to keep its customers all for itself

Vol 10, PW 9 (24 Aug 06) People & Policy

Gujarat Gas unlike Reliance - wants to keep all its customers (exclusively) and exclude entry to competitors.

Its argument is simple: if we pay for the construction of a CGD network we want (exclusive) rights to the customers that this network serves. Gujarat Gas shares GAILs views on this.

GAIL is happy with marketing exclusivity for five or seven years but Gujarat Gas wants it for much longer. International experience in around 25 countries, says Gujarat Gas, suggests that city gas entities are allowed exclusivity periods ranging between 20-25 years as marketing exclusivity is a necessity for the development of CGD networks.

Nor does Gujarat Gas accept the upper limit of 50,000 cm/d in supplies from CGD networks to consumers, as proposed by the draft pipeline policy. The volume restriction needs to be removed to ensure that all consumers (irrespective of volume restriction) beyond the city gate station are serviced by the CGD entity only, Gujarat Gas tells the oil ministry.

Laying of spur lines to consumers requiring more than 50,000 cm/d would jeopardise the very existence of the CGD entity. Marketing obligations in the draft policy should, says Gujarat Gas, specify the period of implementation of the CGD network.

Gujarat Gas agrees that CGD licences should be awarded only after competitive bidding but wants the bank guarantee to be increased to discourage non-serious players. Another suggestion is for compensation to any company that is stripped of its RoU for non-performance.

Gujarat Gas parent British Gas also offers suggestions to the ministry. BG wants authorisation and exclusivity for CGD networks for a geographical area similar to what exists in Argentina.

It also wants to know if existing and planned but not yet built pipelines are required to have 33% extra capacity. BG suggests individual companies should be left to decide on their own if additional capacity is warranted and not be dictated to by government.