Is your CNG, PNG bill set to rise? Here’s what unified gas tariff may mean for you

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Published: September 29, 2017 1:03:31 PM

The Petroleum And Natural Gas Regulatory Board (PNGRB) on Friday floated a consultation paper on unifying the different tariffs charged by the natural gas companies. Here’s what it may mean for you

narendra modi, Morgan Stanley Investment Management, Fidelity Investments, Indraprastha Gas Ltd, Gujarat Gas Ltd, New Delhi, Indraprastha Gas Ltd,  Mahanagar Gas Ltd,  South Asia, china, Aberdeen Asset Management Asia, mumbai.PNGRB on Friday floated a consultation paper on unifying the different tariffs charged by the natural gas companies transmitted over several pipelines. (Image: Reuters)

The Petroleum And Natural Gas Regulatory Board (PNGRB) on Friday floated a consultation paper on unifying the different tariffs charged by the natural gas companies transmitted over several pipelines, in a bid to make gas consumption more affordable throughout India. Albeit, it would also mean that in some areas consumers would be required to pay more.

What is the proposal?

GAIL India, which supplies natural gas to customers such as power plants, fertiliser factories, and city gas distribution companies for selling CNG and PNG, had reportedly proposed a unified tariff of Rs 57 per unit, in place of different tariffs charged by different natural gas pipeline companies. If the proposal is passed, GAIL said, that there will be a uniform gas price across all regions. PNGRB wants to seek views of all the stakeholders through the consultation paper before giving its recommendation to the petroleum ministry.

Will the prices go down?

According to PNGRB, the purpose of unifying tariff is to make gas affordable throughout India, the price of which currently varies across India due to various factors, but most importantly due to different tariffs fixed by different natural gas pipeline companies.

PNGRB board member Satpal Garg, explaining the concept of unified tariff on ET Now, said, “There are multiple pipelines, and each pipeline has its own tariff. So, the consumers in remote areas and hinterland have to pay additive tariffs for all the pipelines. It is unviable… If the unified tariff is adopted, gas becomes affordable in all parts of India,” he added.

A marginal increase in price

However, PNGRB also said that the gas prices would go up in some areas. “There will be an increase for consumers who are nearer to the one single pipeline source, but for a majority, there will be a reduction,” Satpal Garg said without elaborating on which are the areas where there is single pipeline source.

GAIL said unified tariff might mean a marginal increase in overall tariff, but would ensure uniform tariff across all pipelines. GAIL Marketing Director Gajendra Singh claimed that the unified tariff will bring down prices in the north-east and other eastern states. Both GAIL and PNGRB did not elaborate on the actual increase and decrease in the tariff. However, investment banking company BOBCAPS said that the proposed tariff rate is 60% higher than the current levels and offers a massive 45% upside to GAIL’s earnings.

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