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Our Bureau

New Delhi , March 10

GAIL (India) Ltd has said that it would prefer a uniform methodology based on international practices for fixing the transportation cost of natural gas and liquefied natural gas (NG/LNG).

In a statement issued here on Thursday, the company said, "The methodology of fixing the transportation cost of NG/LNG to various consumers is yet to be suggested by the Tariff Commission. GAIL would be happy to accept a uniform methodology based on international practices with clearly spelt-out norms on important parameters such as economic life for capital recovery, actual availability and design margins for volume assumptions."

Once this is standardised, companies other than GAIL, which are engaged in the business of natural gas transmission in India or likely to be engaged in the gas transmission business , would also have to adhere to the norms recommended by the Tariff Commission so that consumer interest is protected in all the cases.

Currently, GAIL is charging distance-reflective zonal tariffs for the Dahej-Vijaipur Pipe Line (DVPL) system, which was mandated by the Ministry of Petroleum and Natural Gas. The Interim Report has recommended a single tariff for transportation of regassified LNG (R-LNG) along the DVPL System, starting at Dahej and ending at Vijaipur.

The Ministry has advised the Tariff Commission to consider the impact of actual volume throughputs and the inflationary effect on the cost of asset replacement, which were not considered in the Interim Report.

GAIL is looking forward to charge the single postalised tariff, as determined by the Tariff Commission and all the customers of R-LNG will be bound by the uniform tariff. Currently, all the R-LNG consumers located downstream of Vijaipur are being supplied R-LNG through the HVJ system. These consumers also include five fertiliser plants, namely, Chambal Fertilisers (Gadepan), Indo-Gulf Fertilisers (Jagdishpur), Oswal Chemicals & Fertilisers (Shajahanpur), Indian Farmers Fertiliser Co-operative Ltd (Aonla) and Tata Chemicals (Babrala).

As per the tariffs mandated by the Ministry, R-LNG consumers beyond Vijaipur are charged a pittance, namely, Rs 22/1,000 standard cubic metres (SCM), which is not reflective of the more than 1,000 km of the HVJ pipeline facilities that they are using to transport R-LNG beyond Vijaipur.

As per GAIL's estimates, the company is suffering an under-recovery of Rs 48 crore annually on account of R-LNG consumers who are using the HVJ facilities beyond Vijaipur.

The state-owned company is looking forward to charge the quantum of tariff as determined by the Tariff Commission for the transmission of R-LNG through the HVJ system downstream of Vijaipur up to New Delhi.

The reference to the Tariff Commission by the Government did not originally extend to the transmission of administered pricing mechanism (APM) gas through the HVJ pipeline, which is currently Rs 1,150 per SCM. In case the Tariff Commission revises the transmission charges for APM gas through the HVJ pipeline system, GAIL will accept any commercially determined tariff based on the methodology laid down by the Tariff Commission for fixing the transportation cost of NG/LNG , the company said.

GAIL is happy with the reference of transportation tariff to the Tariff Commission by consumer groups such as fertiliser companies, it said.

The Tariff Commission, as a de-facto regulator, is expected to recommend a methodology for the computation of transportation tariffs for natural gas, including R-LNG, which will be equally binding on all transporters and consumers of natural gas in the country.

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