Govt to split GAIL within a year: Report

THE Centre plans to split state-run gas utility GAIL by March next year to create two companies: one marketing gas, and another operating pipelines that can be used by consumers who buy direct from producers, GAIL CMD told Reuters.
GAIL (India) Ltd is the country's biggest gas marketing and trading firm and owns most of the nation's pipelines, giving it a stranglehold on the market for the fuel.
By splitting GAIL, the regulator of India's oil and gas sector hopes to increase the number of gas consumers and attract the billions of dollars needed to expand...
the pipeline network and build more liquefied natural gas (LNG) terminals.
"All this un-bundling should be done within this fiscal year (to March 31, 2019)," D.K. Sarraf, chairman of India's Petroleum and Natural Gas Board, told the news agency.
GAIL already keeps separate accounts for its gas pipeline and marketing businesses, making it easier to split them into two entities before a change of ownership, he said.
Sarraf did not say which business GAIL would retain. India's Oil Minister Dharmendra Pradhan in January said the company should focus on laying pipelines, suggesting it is the marketing side that would be hived off.
By unbundling GAIL and opening the sector, the government hopes to increase gas use and meet its objective of raising the share of a cleaner, cheaper fuel as a part of the energy mix to 15 percent, from 6.2 percent, in the next 12 years.
Many power plants and small industries like ceramic, glass and cement makers rely heavily on more expensive or dirtier fuels such as naphtha, diesel and coal. In future, though, even small companies will be able to buy gas via pipelines. The gas regulator hopes by July, however, to draft norms for allowing end-users to bid for using LNG terminals to import gas.
GAIL is the largest state-owned natural gas processing and distribution company in India, based in New Delhi. It has the following business segments: natural gas, liquid hydrocarbon, Liquefied petroleum gas transmission, petrochemical, city gas distribution, exploration and production, GAILTEL and electricity generation. GAIL (India) Ltd was incorporated in August 1984 as a Central PSU under the Ministry of Petroleum & Natural Gas. The PSU was initially given the responsibility of construction, operation & maintenance of the Hazira – Vijaypur – Jagdishpur (HVJ) pipeline Project. It was one of the largest cross-country natural gas pipeline projects in the world. Originally this 1800 Km long pipeline was built at a cost of Rs 1700 Crores and it laid the foundation for development of market for natural Gas in India.
GAIL, after having started as a natural gas transmission company during the late eighties, has grown organically by building large network of Natural Gas Pipelines covering more than 10900 Km with a capacity of around 200 MMSCMD; two LPG Pipelines covering 2040 Km with a capacity of 3.8 MMTPA of LPG; seven gas processing plants for production of LPG and other Liquid Hydrocarbons, with a production capacity of 1.4 MMTPA; and a gas based integrated Petrochemical plant of 410,000 TPA polymer capacity which is further being expanded to a capacity of 900,000 TPA. The PSU also has 70 percent equity share in Brahmaputra Cracker and Polymer Limited (BCPL) which is setting up a 280,000 TPA polymer plant in Assam. GAIL has 32.86 per cent stake along with NTPC as equal partner in JV company, RGPPL at Dabhol which is house to largest gas based power generation facility and an LNG regasification terminal operated by GAIL. GAIL is a pioneer in City Gas Distribution (CGD) business in India, with Indraprastha Gas Limited (IGL) in Delhi and Mahanagar Gas Limited (MGL) in Mumbai being its biggest success stories. Besides IGL and MGL, GAIL has set up several JVs for CGD to supply gas to households, transport sector & commercial consumers in various cities including Hyderabad, Agartala, Kanpur, Indore, Vadodara, Lucknow, Agra and Pune. In 2008, GAIL incorporated a wholly owned subsidiary, GAIL Gas Ltd (GGL) to exclusively focus on city gas distribution business. GGL has been authorized for implementation of CGD projects in four cities namely Kota, Dewas, Sonepat & Meerut in the 1st round of bidding by Petroleum & Natural Gas Regulatory Board (PNGRB).
As a strategy of going global and further expanding global footprint, GAIL has formed a wholly-owned subsidiary company, GAIL Global (Singapore) Pte Ltd. in Singapore for pursuing overseas business opportunities including LNG & petrochemical trading. In US, GAIL has 20 percent working interest with Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage, Texas through a wholly owned subsidiary GAIL Global (USA) Inc. GAIL is also an equity partner in two retail gas companies of Egypt, namely Fayum Gas Company (FGC) and National Gas Company (Natgas). Besides, GAIL is an equity partner in a retail gas company involved in city gas and CNG business in China.