GAIL plans آ‘variable pricingآ’ for LNG on HBJ

Vol 5, PW 4 (11 Apr 01) Midstream & Downstream

Also welcome is news that GAIL is examining plans to introduce "variable" pricing for LNG that it sells along the HBJ.

No precise details are available about the exact formula, suffice it to say GAIL plans to charge customers "variable" rates for regassified LNG. This could either be relative to distance travelled, or more likely, through an inter-state zone system, with each zone charging different rates.

"The final tariff will be based on international norms and customer feedback on this issue," confirms a GAIL spokesman. Important to note is that plans under consideration will affect future pricing of regassified LNG, not domestic gas from the Bombay High and Hazira that already travels along the HBJ.

This is charged at a uniform rate of Rs1,150 ($25) for a thousand cubic metres to customers sitting at the beginning of the HBJ in Hazira or on the other side of India in Jagdishpur. Several industry analysts argue a uniform transportation price of Rs1,150 ($25) is unsustainable in a future deregulated scenario.

"When Reliance builds a gas pipeline they'll introduce variable pricing," reveals a source. "We will have to introduce variable pricing if we are to compete." But an official GAIL spokesman defends uniform pricing, saying it would be unfair to expect end-users at the extreme end of the HBJ to pay more than those at the start.