GAIL monopoly of the HBJ pipeline draws to a close

Vol 12, PW 1 (29 May 08) People & Policy

Other than standing up to the oil ministry, the Petroleum and Natural Gas Regulatory Board is also busy with more mundane matters.

PETROWATCH learns for example the Board is finalising regulations that will set transmission tariffs for existing and new contract or common carrier gas pipelines. These are likely to be â€کnotified’ within a month, with publication in the Gazette of India, whereupon they will become official government policy.

Once these regulations take effect, GAIL will be legally obliged to offer the HBJ trunk pipeline either as a contract or common carrier pipeline, marking the end of its monopoly over India’s first cross-country gas transmission pipeline. Companies with â€کdead’ or underutilised pipeline assets will also see an opportunity, “leading to a flood of applications seeking to convert these pipelines to common carrier status.

â€‌ Under the new regulations the transmission tariff for new pipelines will neither be uniform across the length of the pipeline nor vary according to distance from the supply source. “We want to work out a compromise between both choices,â€‌ says a source.

“We have opted for a zone-wise system in which the tariff will be distance based but uniform within each zone. Our system will be very near to the entry and exit system of pipeline tariffs prevalent in Europe.

â€‌ Our source continues that the aim is to ensure that the transporter gets a reasonable return on investment, the investor gets adequate comfort and pipeline infrastructure is built up fast in an “energy-starvedâ€‌ country like India. In addition to transmission tariffs, the Board is also finalising two more sets of regulations: an Affiliate Code of Conduct and a Pipeline Access Code.

Both are expected to be published in the government Gazette, also within a month. “The Access Code will provide maximum access to common or contract carrier pipelines,â€‌ we hear.

“It will also determine the promotion and development of natural gas markets in India.â€‌