The Hindu Business Line : GAIL gas pipeline

All installations of GAIL above ground, which are part of the pipeline systems, are covered for the risks of natural calamities such as fire, flood, earthquake and terrorism. Only the pipelines, which are below the ground are not covered for reasons that the insurance premium would actually outstrip the actual loss to the pipeline. GAIL's pipeline systems are laid under ground at a depth of about 1 metre and are protected by state-of-the-art safety and surveillance systems. Based on the internal risk assessment of the pipelines, GAIL feels that the maximum possible loss for the pipelines would not be more than for 2-3 km in any event of loss. However, the All India Fire Tariff does not have the provision whereby the company can take the insurance cover for the part of the pipelines that is at risk. As per its provision the insurance cover would have to be taken for the entire pipeline, i.e., for about 6000 km.

The premium, as per the tariff for the pipelines insurance under this provision, may actually outstrip the actual loss to the pipeline. However, in order to protect the interests of the company in the case of third party liability, GAIL has also taken non-statutory insurance cover over and above the statutory insurance cover.

With reference to the depiction of the Right-of-Use (RoU) as part of the fixed assets, upto last year the RoU was classified as a fixed asset separately without charging any depreciation.

This was based on the advice of the Expert Advisory Committee of the Institute of Chartered Accountants of India (ICAI). However, in the current year this policy has been reviewed in light of the advice of the Comptroller and Auditor General of India (CAG) and RoU has been categorised along with the intangible assets of the company.

Jignesh Vasavada

Dy. Manager (CC)

GAIL (India) Limited

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GAIL gas pipeline