Indian Regulator Proposes Uniform Tariff for Gas Pipelines

In a move that could improve the distribution of gas and boost its share in the energy mix, India's regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) floated September 28 a consultancy paper on a unified or pooled tariff for use of multiple natural gas pipelines.  

At the moment, PNGRB sets a different tariff for separately authorised pipeline or pipelines, the tariff tracking the flow of gas contractually through the pipeline from entry to exit, regardless of the actual physical or virtual flow. 

A unified tariff could do away with adding tariffs together when a number of pipelines is used, helping in equitable distribution of gas and facilities, uniform gas based economic development across the country and increased share of natural gas in energy mix. However, in case of unified tariff, tariff for some existing natural gas pipeline customers may increase, PNGRB said.

If implemented, Gail, which owns the largest network of natural gas pipeline in India, will benefit the most as many analysts believe that its weighted average transportation tariff will almost double from current level of rupees 37.1/mn Btu ($0.57/mn Btu). Gail operates almost 15,000 km of gas pipeline across the country and is working on the ambitious $2bn Jagadishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL). This 2,539-km pipeline is expected to be fully completed by December 2020. The first phase of the pipeline will be complete by end-2018 and the second phase by end-2019.

Notably, the proposal has already been approved by the Cabinet Committee on Economic Affairs (CCEA) and now India's petroleum ministry has to decide, based on PNGRB recommendations. 

Shardul Sharma

Shardul Sharma