India Simplifies Gas Pipe Tariff Structure

Indian downstream regulator Petroleum and Natural Gas Regulatory Board (PNGRB) on November 26 announced that the gas pipeline tariff regime would be simplified, to make gas more affordable for customers far away from the source of the gas.

For the purpose of applying the ‘unified’ tariff, PNGRB has divided pipelines into two zones. The first zone will be 300-km from the source of gas such as a gas field or LNG import terminal, and the second zone will be beyond that.  At present, the tariff is levied in proportion to the distance that the gas is transported - the longer the distance, the higher is the charge. Owing to this structure, consumers away from the source were paying higher charges as compared to those near it.

Talking to CNBCTV18 news channel on November 27, PNGRB chairman Dinesh Kumar Sarraf said that zone one customers are likely to pay only 40% of the ‘unified’ tariff, which will be set by PNGRB at the start of every financial year.

Sarraf added that the ‘unified’ tariff structure would lead to higher gas consumption in far-flung areas which will then boost overall gas usage in India. The south Asian nation is looking to increase the share of gas in the overall energy mix to 15% by 2030 from 6-7% now.  

Industry experts told Economic Times that under the 'unified' tariff regime consumers based in Gujarat, which is the landfall for state-run ONGC's offshore gas and has three gas import terminals, will see a rise in the tariff. Customers in landlocked states such as Bihar will witness a decrease. 

The new unified tariff structure will be applicable to pipelines operated by state-run Gail as well as more than a dozen other pipelines that form the national grid.