Former SEBI chairperson will soon take action in the gas transportation case, monopoly will end

New Delhi : Former SEBI chairman Ajay Tyagi is considering taking a big decision regarding gas transportation. Ajay Tyagi will soon form a committee to end the monopoly of companies involved in the transportation and marketing of natural gas and retail sale of city gas.

The Petroleum and Natural Gas Regulatory Board (PNGRB) said in an order that the eight-member committee has been asked to give its recommendations on splitting the entities involved in transportation and marketing of natural gas and, where necessary, eliminating the monopoly of city gas retailers. The committee has been asked to submit its report in three months.

Dominance over the market

Energy infrastructure in mature markets is operated on a common carrier principle that gives access to third parties. The government had considered splitting state-owned gas company GAIL (India) Ltd a few years ago, including the option of carving out its pipeline business as a separate entity and selling it to strategic investors. This was considered because GAIL owns more than two-thirds of the country’s pipeline network, giving it a dominant market share.

Left without any explanation

GAIL is also the country's largest natural gas marketing firm and users often complain that they do not get access to the company's pipeline network to transport their fuel. Splitting GAIL was considered to resolve the conflict arising out of a single entity handling two functions of gas transportation and gas marketing. But the plan was dropped without any explanation.

organizing committee

Similarly, in many cities, gas operators have a monopoly in the supply of CNG for vehicles and domestic LPG (PNG) for cooking. If a third party wants to supply the fuel, it does not have access to its network of pipelines. Now PNGRB has formed a committee to promote competition and provide a level playing field in gas transportation and distribution businesses. The PNGRB Act of 2006 mandates separation of activities related to natural gas marketing and transportation, the regulator said in its order dated September 10. However, this objective has not been achieved yet.

(With agency input)