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GAIL’s transportation tariff proposal faces strong stakeholder opposition

Stakeholders have opposed the transportation tariff submitted by GAIL due to the uncertainty of economic life extension, volume divisor, Capex outgo and the number of working days

GAIL’s transportation tariff

New Delhi: Gas Authority of India Ltd’s (GAIL) proposal for transportation tariff for a Krishna Godavari (KG) basin natural gas pipeline has been resisted by stakeholders, comprising GMR group, H-Energy, and Gujarat State Petronet Limited (GSPL). Commenting on the tariff proposal hosted on the Petroleum and Natural Gas Regulatory Board (PNGRB) website, stakeholders, opposed the tariff submitted by the state-owned natural gas utility due to the uncertainty of economic life extension, volume divisor, Capex outgo and the number of working days.

PNGRB held an open house earlier this week to talk about the stakeholders’ comments. The regulator had, in its tariff order dated March 2016, issued final natural gas pipeline tariff for the KG-basin till the end of the economic life, which extended till February 2017, as per the public consultation document hosted by PNGRB. PNGRB has said the tariff order issued did not consider an extension in the life of the pipeline beyond February 2017. The extension of economic life beyond the said period is still under the board’s consideration, PNGRB said. 

The previous tariffs

The KG-basin natural gas pipeline, a pipeline network spanning 877.86 kilometres, has a provisional capacity to transport 15.99 million standard cubic meter per day (MMSCMD) of gas, including common carrier capacity of 4 MMSCMD. Between 2008-09 and 2014-15, the regulator determined a transportation tariff of Rs 5.56 per Million British Thermal Units (MMBTU) for the natural gas pipeline on the Gross Calorific Value (GCV) basis.

The regulator determined a rate of Rs 5.56 per MMBTU for the financial year 2015-2016 and Rs 45.32 per MMBTU for 2016-2017. PNGRB asked for updated tariff filing in a letter dated September 25. It asked GAIL to provide an updated tariff filing with information till 2017-2018. “Accordingly, PNGRB is requested to notify final tariff beyond February 2017 only after completing the due diligence process for the extension of the economic life,” H-Energy submitted.