The Hindu Business Line : Panel moots cheaper rates for gas transportation

The Tariff Commission, which was asked by the Ministry of Petroleum and Natural Gas to examine the issue of transportation charges levied by GAIL (India) Ltd for supply of gas from the Krishna-Godavari Basin to independent power producers (IPPs), has worked out tariff method based on cost of service by grouping consumers connected to the gas supply network.

As per this methodology, the gas price works out cheaper than tariff charged currently by GAIL.

Currently, tariffs are being charged by GAIL based on its contracts with individual consumers, which are linked to gas supply quantity. Additional transportation charges are levied per unit of additional gas supplied under fallback category. In its report, the Commission has worked out normative tariff by grouping the consumers as networks. The Commission is of the view that it will be appropriate to charge tariff based on actual quantity of gas supplied.

Accordingly, it has computed normative tariff, based on per unit gas supplied.

The normative tariffs have been computed for a five-year period 2005-06 to 2009-2010 based on the actual cost of operation for the year 2004-05. During 1996-97 to 2004-05, the total revenue from the tariffs charged by GAIL was Rs 606.78 crore more than the tariff computed on the basis of a similar methodology adopted in normative tariff computation, the Commission noted. It felt that consumers should be compensated for this excess recovery by GAIL either by way of rebate in their future bills, or by outright refund, or through a mutually agreed mechanism.

According to the Commission, the lowest normative tariff computed is for Tatipaka-Kakinada section at Rs 298 per MSCM and the highest tariff works out for Tatipaka-Kondapalli section at Rs 730 per MSCM.

The higher tariff is mainly on account of longer pipeline laid for supplying gas from the main source point.

Operationally it would be ideal to have a single tariff applicable to all consumers connected to the network, the Commission said, adding that the combined tariff for all three sections - Tatipaka-Kakinada, Tatipaka-Kovuur, and Tatipaka-Kondapalli - works out to Rs 404 per MSCM.

For two sections - Tatipaka-Kakinada and Tatipaka-Kovuur the combined tariff works out to Rs 320 per MSCM. These combined tariffs are higher by 36 per cent and seven per cent, respectively, compared to the lowest tariff of Rs 298 per MSCM for Tatipaka-Kakinada section.

Combined tariff

Since the adoption of combined tariff for all three sections will result in substantially higher price for bulk consumers in that section, the Commission has suggested that for the present combined tariff could be worked out for the consumers in Tatipaka-Kakinada and Tatipaka-Kovuur sections at Rs 320 per MSCM and a separate tariff worked out for consumers in Tatipaka-Kondapalli section at Rs 730 per MSCM. Some of the IPPs, which had raised the issue of gas transportation charges levied by GAIL with the Ministry included LANCO Power Pvt Ltd, GVK, Spectrum and BSES.

More Stories on : Petroleum | Power | Regulatory Bodies & Rulings | GAIL (India) Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page