Though it is amply clear by now that the marketing and pipeline businesses of state-run GAIL (India) will be separated, opinions of departments within the government seem to differ on the ownership and shape of the new entity to be created.
While the ministry of petroleum and natural gas feel the pipeline company should remain a subsidiary of GAIL, same as GAIL Gas which operates the city gas distribution business, the Niti Aayog and the department of investment and public asset management (DIPAM) are of the view that the pipeline division should be an independent entity.
According to sources, the Prime Minister’s Office had called a meeting to hear out both the options but is yet to give any direction.
Sale of pipelines is part of the government’s asset recycling or monetization plan. Apart from pipelines, transmission lines of Power Grid Corporation, telecom towers of BSNL and MTNL, ports and railway stations are the other assets under the radar of the government.
GAIL started the work to transfer its pipeline vertical into a subsidiary of the parent company and hired a consultant to work out the options last year. Earlier in the year, petroleum minister Dharmendra Pradhan had made it clear that GAIL should separate the two businesses.
The company earns 70% of its revenue through marketing whereas 40% of profits come from the natural gas transmission business.
GAIL has a pipeline network of over 11,400 km in India accounting for three-fourths of natural gas transmission. It is also working to add another 5,000 km of pipelines which include the Pradhan Mantri Urja Ganga Project which will connect the eastern and the north-eastern states. The gas marketer has often come under criticism for prioritizing its own gas for transmission.
Sources also added that pipeline owned and managed by ONGC and Indian Oil may also be looked into in the future for monetization. DIPAM is believed to been working on various models of monetization of existing assets of PSUs. The receipts from monetization are likely to be used for expansion of the asset. One of the options is also that real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) will run the revenue-generating assets on the transfer-operate-transfer basis and investors will be able to buy units.Share This