Govt may not split up GAIL: Report

THE  Centre may not split up GAIL, gas utility as the government is working on plans to enable the Maharatna gas utility to keep its marketing and pipeline operations separate without breaking up the company, Petroleum Minister said last week. The government had said in January that it wanted to split the company into two - one for laying pipelines and the other for marketing and petrochemicals - to encourage more transparency between the two operations. "My job is not to create more companies, my job is to create more...
accessibility through policy," Dharmendra Pradhan, Petroleum & Natural Gas Minister said.
GAIL (India) Ltd is the country's biggest gas marketing and trading firm and owns most of the nation's pipelines, giving it a dominant position in the country's energy market. Investors, private companies and consultants have said that GAIL's dominance in pipeline infrastructure across the country conflicts with its business of marketing and trading of natural gas.
Pradhan said: "Gail must be seen to be transparent," adding that Gail was working on a model to keep its pipeline and marketing businesses independent of each other.
"My job is to create more transparency and a neutral platform so that other companies can also utilise that infrastructure," Pradhan said.
He did not give a reason for the government's change of position on splitting up the company, which was seen earlier as a move to raise money by selling its marketing arm to a state-owned oil refining and marketing company.
The country's top two refiners Indian Oil Corp Ltd and Bharat Petroleum Corp Ltd had shown interest in integrating GAIL's marketing arm with their business.
'Unbundling' of GAIL was one of the three key steps towards creating a natural gas marketplace in India, the other two being forming a trading hub and open access to gas pipelines, the head of India's gas regulator D K Sarraf had told Reuters in April.
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)," Sarraf had said.
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.
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.
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.