GAIL India has proposed to unbundle its activities by splitting the company into two. One entity will look into gas sourcing, exploration & production, petrochemical activities, while the other will market and trade in natural gas, its existing business.
Prashanto Banerjee, chairman and managing director, said, "We are unbundling gas sourcing, exploration and production and petrochemical from our marketing activity. The marketing and trading gas activity will be spun off into a special business unit which will be later hived off into a subsidiary. We are also planning to list this company." Banerjee was briefing media persons on its national gas grid proposal, in Mumbai on Thursday.
GAIL was set up primarily for development of gas sector infrastructure in the country. Natural gas transmission and marketing continues to constitute the core business of GAIL.
In 2002-03, gas sales stood at 21.12 billion cubic meters as compared with 20.68 bcm in the previous year.
The unbundling of activities is important with GAIL implementing the national gas grid (NGG).
"It is necessary for GAIL to separate its own gas from exploration and production activity from that supplied through the national grid. This is important considering the users of NGG will have an open access to all our pipelines, new as well as the existing ones."
"We have already started separating accounts for the gas sourcing, E&P and petrochemical from that of marketing and trading," says B S Negi, director (planning).
The gas source will have to be identified as GAIL in consortium with various companies has been allotted 8 blocks in NELP. It also has participating interest in Myanmar A-1 block and Cauvery ofshore block of Hardy Oil.
Banerjee said, "We are working towards a tariff which is based on cost of service system for NGG and this tariff will have an approval from a Gas Regulator or in the interim period by the government."
GAIL has already conceptualised the NGG to lay 6,490 km long pipelines to transport high pressure gas from one state to another besides 1,400 km associated spur lines thereby taking the total grid size to 7,890 km. The estimated investment for this projects is to the tune of Rs 20,000 crore (Rs 200 billion).
The grid includes setting up of Dahej-Vijaipur pipeline (610 kms), Dahej-Uran-Pune (520 kms), Kakinada-Hyderabad-Pune (1250 kms), Kakinada-Kolkata (1150 kms), Kakinada-Chennai (580 kms), Chennai - Bangalore (500 km), Dabhol-Bangalore-Coimbatore-Kochi (900 kms) and Kolkata-Jagdishpur (980 kms), he said.
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