What will be the impact of the proposed 45% cut in GAIL’s gas pipeline transportation charge on the company’s revenues?
The report of the tariff commission is yet to be finalised. Hence, no question arises regarding any impact on GAIL.
What are GAIL’s suggestions for fixing tariff?
GAIL has not given any recommendations.
Should there be different methods that the government must use to calculate the tariff for PSUs and private sector companies?
No. In line with global practices, GAIL supports charging tariffs based on uniform computation methodology for the entire industry in the country.
What should be the parameters for calculating tariffs?
GAIL would be happy to accept a uniform methodology based on international practices with clearly spelt-out norms on important parameters like economic life for capital recovery, actual availability and design margins for volume assumptions, number of operation days, inflationary effect on cost of asset replacement and return on equity.
What is the current status on the profit gas issue?
As per the NELP production sharing contracts, the government is entitled to take its share of gas in kind. The latest draft Gas Pipeline Policy states that government propose to develop the availability of gas in different regions by insisting on taking in kind the government’s share of PSCs in the various gas fields and allocating it to GAIL for supply to different regions.
Private companies have said that once the proposal is implemented, it will be difficult for them to make long-term commitments. Please comment?
The commitment of gas supplies to consumers depends on the production profiles projected by the producers. Similarly, the government share of the profit gas, which is also linked to the total production profile, can be predicted. Furthermore, all gas sales contracts between the producers and the buyers provide that, at the beginning of the year, a schedule of the volume to be delivered for the whole year. With the government taking its entitled share of gas in kind, the schedule of producers share of volume can be arrived at by deducting volume equivalent of the profit gas from the projected production volume for the year and spreading the net volume thus derived on an equal monthly basis. The effect of the profit gas on actual production differing from the estimate is reconciled at the end of the year.