India's new pipeline tariffs to boost gas use in far-flung areas

Gujarat State Fertilizers & Chemicals

27/11/2020 15:11

* New gas pipeline tariff rules to come in force in 2-3
months
    * New rules to help ONGC get better prices of east coast gas
    * Gas pipeline cos to gain in long run as demand rises

    By Nidhi Verma
    NEW DELHI, Nov 27 (Reuters) - India will cut gas pipeline
tariffs for areas far from gas injection points as the nation
seeks a cleaner fuel-led industrial development across the
country, an official at the Petroleum and Natural Gas Regulatory
Board said.
    Differential pipeline tariffs is one of the key reasons for
uneven gas use in the country, which aims to raise its share in
energy consumption to 15% by 2030.
    Gas accounts for about a quarter of energy-mix of the
western state of Gujarat, which hosts three liquefied natural
gas (LNG) import terminals and is near to gas producing fields,
compared to the national average of 6.2%.
    "Customers will be paying single tariff if they are linked
to the national gas grid of more than 15,000 km. This will help
customers in the north, northeast and eastern part of the
country," Board member Satpal Garg said on Friday.
    The new rules are expected to come into force in next 2-3
months, he said.
    At present, the tariffs are linked to the distance and the
number of pipelines used for transportation of gas from the
injection points, making the fuel costly for many industries and
hurting the development of far flung areas.
    "The new structure will be beneficial for all industries
using multiple pipelines for gas purchase," he said.
    For an industry taking supplies through a single pipeline
and located within 300 km of gas injection point, the new tariff
will be about 26 rupees per million British thermal unit
(mmbtu), an increase of up to 30% from current rates, he said.
    For others tariffs would be 66 rupees/mmbtu compared to over
100 rupees/mmbtu in some cases, he said, adding a shift to
uniform rates would help Oil and Natural Gas Corp's  ONGC.NS 
get better prices of its east coast gas.
    For pipeline operators like GAIL (India)  GAIL.NS  and
Gujarat State Petronet Ltd  GSPT.NS  the new rules will be
revenue neutral while fuel costs for fertiliser plants and
others in eastern and southern India will be reduced, he said.
    "In the long run pipeline companies will get the benefit as
gas volumes will go up," he said.
    

 (Reporting by Nidhi Verma; editing by David Evans)
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))