No plan to split GAIL, says Oil Minister Dharmendra Pradhan

By: |
March 15, 2021 6:07 PM

GAIL is India's biggest natural gas marketing and trading firm and owns 60 per cent of the country's 26,284-km gas pipeline network, giving it a stranglehold on the market.

GAILFor this, the government is promoting the expansion of natural gas infrastructure -- pipelines, LNG import terminals and city gas distribution network, he said.

The government is not considering any proposal to bifurcate state-owned gas utility GAIL (India) Ltd, and the company is focused on building pipelines to connect gas sources to consumers to accelerate gas usage, Oil Minister Dharmendra Pradhan said on Monday.

GAIL is India’s biggest natural gas marketing and trading firm and owns 60 per cent of the country’s 26,284-km gas pipeline network, giving it a stranglehold on the market.

To resolve the conflict of a transporter also being the marketer, it was proposed that GAIL’s pipeline business should be hived off into a separate entity. But the proposal has been dropped for now. “There is no such proposal under consideration at present,” Pradhan said in a written reply to a question in the Lok Sabha on bifurcation of GAIL.

He said the share of natural gas in India’s primary energy basket is targeted to be increased to 15 per cent by 2030 from the current 6.3 per cent.

For this, the government is promoting the expansion of natural gas infrastructure — pipelines, LNG import terminals and city gas distribution network, he said.

“GAIL is executing projects related to the expansion of gas infrastructure in the country,” he said. PTI had last month reported that the plan to bifurcate GAIL has been dropped to enable strength of a combined balance sheet to raise funds for the projects.

The plan was to transfer the pipeline business into a subsidiary, while GAIL was to hold the core business of marketing natural gas and petrochemical production.

“GAIL is majorly implementing Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL) with Barauni-Guwahati Pipeline in the state of Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal, Assam and Kochi-Kootanad-Bangaluru-Mangalore Pipeline (KKBMPL) in the state of Kerala, Tamil Nadu and Karnataka,” Pradhan said.

GAIL, he said, has taken up a company-wide cost optimisation drive to bring down the cost and improve operational efficiency as well as digitisation to enhance profitability.

In the push towards a gas-based economy, the government has taken major steps including allowing fair price discovery through e-bidding platforms and gas trading exchanges.

Also, finding and production of gas has been sought to be increased by the introduction of open acreage licensing policy and auction of discovered fields, he said.

GAIL owns and operates a natural gas pipeline network that spans 15,673.3 kilometres, mostly in the western, southern and northern parts of the country. It is building more pipelines in the eastern region. The government has a 54.89 per cent stake in GAIL India.

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