Adani and GAIL talking on HBJ gas transportation tariff

Vol 10, PW 13 (19 Oct 06) Midstream & Downstream

Adani Energy is waiting to hear from GAIL about the transportation tariff for use of its HBJ pipeline to carry gas to its city gas distribution projects in northern India.

Adani is under mounting pressure to begin gas supplies to its CGD networks in Noida and Faridabad on the outskirts of Delhi by 31st December and is dependent on the HBJ to bring in gas from Gujarat. An industry source tells us Adani asked GAIL for connectivity at certain points along the HBJ.

GAIL gave Adani a questionnaire seeking technical information, we are told. Adani sent in point-by-point replies.

Teams from both companies have since held regular meetings to thrash out the details that would enable GAIL to formulate a tariff. Adani expects to receive the proposed tariff in a week.

The tariff for the use of the HBJ is already known, we hear. What GAIL must add are the costs it will incur in installing meters and other equipment for delivering gas at the Adani receiving points.

GAILs tariff is likely to be a mix of fixed and variable elements. The fixed element will be the capacity booking charge for use of the pipeline, we are told, and the variable element will be the commodity charge depending on the quantity of gas that flows through.

GAIL, it seems, prefers to be flexible about the term for which capacity can be booked. They are open to a 10-year period or even shorter, says a source.

They have left it to Adani to decide. Once agreement is reached GAIL will send Adani a draft Gas Transmission Agreement (GTA).

Adani has yet to formally receive the GTA but it already knows the contents. GAILs draft GTA is more or less a carbon copy of the GTA from Gujarat State Petronet, we hear.

Even the clause numbers are the same. You would be hard pressed to spot the difference.

Adani already has a GTA with Gujarat Petronet for gas supply to its CGD network in Ahmedabad.