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Pradhan makes GAIL pipeline & marketing business unbundling plan official

Dharmendra Pradhan has said that the plan to split the pipeline and the marketing arms of GAIL (India) Limited is something that the Centre is pursuing seriously

The marketing business will be separated from the pipeline and infrastructure division at GAIL and will continue to function as subsidiaries of GAIL, said Dharmendra Pradhan.
  • In order to make GAIL more competitive and to increase its credibility, the government has been working on a plan to split its pipeline and marketing arm, said Pradhan

  • Slowly, we want to open up GAIL’s marketing division as we move towards realising the idea of having a gas exchange, the minister said

New Delhi: Elaborating on the government’s disinvestment plan, Minister for Petroleum and Natural Gas Dharmendra Pradhan has said on Tuesday that the plan for unbundling the pipeline and the marketing arms of GAIL (India) Limited is something that the Centre is pursuing and it is line with the government’s policy of privatisation and mergers in the public sector. “In order to make GAIL more competitive and to increase its credibility, the government has been working on a plan to split its pipeline and marketing arm,” said Pradhan.

The marketing business will be separated from the pipeline and infrastructure division at GAIL and will continue to function as subsidiaries of GAIL, said Pradhan in an interview. “This will ensure that there will be no conflict of interest. Secondly, the government needs GAIL to lay down more pipelines across the country. Whereas as far as marketing is concerned, the market has come of age and there are several market players. It will ensure a fair competition between them. And slowly, we want to open up GAIL’s marketing division as we move towards realising the idea of having a gas exchange,” said the minister.

‘Govt waiting because it wants to realise full value of a brand like BPCL’

Commenting on the setback caused to the BPCL disinvestment timeline for the government because of the COVID-19 outbreak, the minister said that the government has been taking a wait and watch approach towards it because of the volatile market conditions. “The idea is to realise the full value of a brand like BPCL when its is disinvested. And therefore, we have extended our deadlines and are waiting to see what the response is like,” said Pradhan.

He added that the announcements made by Finance Minister Nirmala Sitharaman last week are in line with the Centre’s idea: The government has no business to be in business. Pradhan said that all policy-decisions relating to the public sector will be guided by this idea and that the intention is to open the market up and bring in new players, new technology and investment.

‘India in talks with US to store crude oil abroad’

Pradhan also said in the interview that apart from having stored 38-40 MMT of crude oil which equals 20 percent of the annual oil demand of the country, India is also in talks with the US for getting a storage facility abroad. In order to make the most of the decline in global crude oil prices, India is planning on storing as much crude oil as is possible. 

India has strategic reserves of 5.33 MMT which caters to 9-10 days of India’s oil demand. Pradhan said in an interview that this capacity has already been filled by the government. Additionally, 8.5-9 MMT of crude oil is stored as floating reserves with GCC (Gulf Cooperation Council) countries and the remaining has been stored by refineries at different sites.