Sanjay Gupta defends Gujarat gas grid

Vol 4, PW 6 (26 Apr 00) Midstream & Downstream

Sanjay Gupta, Managing Director of Gujarat Petroleum Corporation (GPCL), has hit back at multinational critics of theproposed 2,500-km gas grid.

"Corporates only support regulation if it fits into their corporate plan," Gupta tells a correspondent for Petrowatch, "The moment it is not according to their plan they do not want to support it. Multinationals should realise that regulation will not always fit 100% with their objective.

They should look at what is happening the world over. The gas industry is regulated everywhere, even in their own home countries." Sounding a conciliatory note, Gupta added: "Multinationals do not want the regulation to be very heavy and we accept this demand.

They also want the gas sector to be shielded from the vagaries of political decision making. We accept this also." Gupta defends a decision to grant Gujarat Petroleum monopoly control of the grid, through its subsidiary Gujarat State Petronet.

"The gas transmission business is a monopoly business everywhere," said Gupta, "Where in the world do you have three lines with idle capacity doing the same thing Transmission systems are like highways. There cannot be multiple highways connecting two destinations.

The moment the highway gets saturated you build additional capacity." Gupta dismisses accusations that GPCL will make excessive profits from its control of the transmission tariff. "It is nonsense.

We will regulate the transmission tariff - but not the end tariff or the supply tariff. We will work on a 15% rate of return.

Check up with any company whether they are willing to lay down a transmission network and operate with 15% return on their equity. They all want 15 per cent plus."