Regulator to re-look gas transmission tariff

With the number of players in gas pipeline infrastructure expected to increase from the present six, the Petroleum and Natural Gas Regulatory Board (P&NGRB) feels the need to take a re-look at the transmission tariff.

A view is emerging that for India, the model based on the entry-exit system, popular in Europe especially in the UK, would work, official sources told Business Line. P&NGRB is working on a national gas management system (NGMS) to streamline tariff-sharing among various pipeline system owners.

“P&NGRB has examined the approach paper and is likely to appoint an international consultant for the purpose,” an official said. This was to ensure that consumers at geographically disadvantaged locations were not excessively burdened with higher tariff, the official said.

Under the entry-exit system, a fixed charge in the form of entry charge is collected from the shipper for ‘per unit' of commodity. In addition, the shipper has to pay transportation charges in proportion to the distance travelled by the commodity.

Currently, P&NGRB regulations for the transportation tariff envisages a zonal tariff system, which allows a uniform tariff within a zone of 300 km from the delivery point; subsequently, there is a change in tariff at the next zone and so forth. The available models for pipeline tariffs are postalised tariff, distance-based tariff and entry-exit tariff.

Under the postalised tariff model, a single tariff is applicable throughout the system. In the case of gas flowing from one system to another, both operators are eligible to charge tariff. While in the case of distance-based tariff, the shipper has to pay tariff in proportion to the distance travelled by the commodity.

There are currently seven transmission pipelines and seven regional networks. The transmission pipelines are operated by six players – GAIL (India), Gujarat State Petronet Ltd, Gujarat Gas Company Ltd, Reliance Gas Transportation Infrastructure Ltd, Indian Oil Corporation, and Assam Gas.

Mr B.S. Negi, Member, P&NGRB, said: “In a competing economy, the shipper may have to transport gas through systems owned by various entities. The chargeable tariff, which a shipper needs to pay, will, therefore, be different from place to place. Normally, a shipper using more pipeline systems may have to pay much higher tariff.”

Asked what would be the revenue-sharing model under the entry-exit concept, Mr Negi said, “The first model can be implemented wherever the gas enters a system; the entry charge will be collected by the transporter and the exit charges will be collected by the pipeline system operator who delivers the gas to a customer. The sharing of revenues will be decided by NGMS based on a formula.”

In a multi-operator regime, the second model can be implemented where all pipeline owners will be allowed to develop a network according to P&NGRB regulations and NGMS would work as a shell company where the equity of each pipeline owner will be in proportion to the pipeline capacity that he will offer to the NGMS.

Source: Hindu Business Line

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