The Hindu Business Line : Gas Act: Gujarat hoping to keep `first mover' gains

THE Supreme Court decision on the Presidential Reference regarding the supremacy of the Centre over the State Government in public distribution of gas has come as a distinct setback for the Gujarat Government.

The Gujarat Gas Regulation Bill that sought to call the shots by playing regulator on the gas hauled through the State has come to nought. The flip side is that the Gujarat Government has laid a 400-odd km gas transmission line in a hurry and has already invested nearly Rs 1,000 crore in the gas grid. Now, it is hoping that the Central Gas Act as and when it comes will not tinker with the existing pipelines and will only be post facto.

However, under scrutiny will be issues such as common carrier principle and first bird advantage for the gas pipelines that have already been laid. And the onlookers will not only be domestic gas majors but also some of the global leaders such as British Gas, Gaz de France and Royal Dutch Shell. Though the Presidential Reference is not quite the same as a Supreme Court judgement, the State Government is now bracing for the Central Government to promulgate the Petroleum Regulatory Bill in the coming months. However, with the Lok Sabha elections around the corner, the State Government has reason to believe that it has time at least till June before such an Act is passed by the Centre.

Though the Gujarat State Petroleum Corporation (GSPC) will not be affected as it is a petroleum exploration and production company, it will be its subsidiary, Gujarat State Petronet Ltd (GSPL), that will have to reconsider its future options.

GSPL though feels that till such time that there is a law restricting its activities, it can continue to lay pipelines across the State. The big question that is doing the rounds here is whether this will automatically translate into a monopoly status for Gas Authority of India Ltd.

With GAIL (India) itself having entered into a gas transmission contract with GSPL for a bulk of its share of Petronet LNG gas from Dahej, the pundits are inclined to shrug off such an eventuality. Especially as the Royal Dutch Shell LNG terminal at Hazira too will commence commercial production scheduled in a year's time.

Come June, GSPL would have laid a gas transmission network of some 450 km by June at an aggregate capital outlay of nearly Rs 1,000 crore. Of this, the last leg to be commissioned was the 83-km, Rs 157-crore Paguthan-Vadodara stretch in September 2003. And fast nearing completion is the 134-km trunk route line linking Vadodara and Kalol with the major junction being Ahmedabad.

While this line is set for completion in April at a cost of Rs 198 crore, June will see the 60-odd km Surat-Bharuch linkage at a cost of approximately Rs 100 crore. It is the Gujarat Government's hope that it will not be docked for its pro-active approach to getting a regulatory act in place for an area of activity where it is far ahead of other States. Instead of a confrontationist approach, it is hoping for an amicable solution to all outstanding issues, despite the role of the arbitrator passing on to the Central Government.

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