GAIL India is studying the impact of the recent tariff order by the Petroleum and Natural Gas Regulatory Board (PNGRB) on its financial position.
Some reports indicate that the May 10 order of PNGRB may cause Rs 500 crore loss for the company. In its order, the downstream regulator retrospectively reduced the tariff charged by GAIL for its Krishna Godavari Basin network which comprises four regional pipelines.
According to the order, “The provisional initial unit natural gas pipeline tariff on levelised basis determined by the Board for the KG basin natural gas pipeline network of GAIL as a single integrated network shall be Rs 5.56 per mmBtu on gross calorific value basis .
It may be noted that GAIL has been charging Rs 11.44 per mmBtu tariff for Tatipaka-Kakinada-Kovuur network and Rs 28.38 per m mBtu for Tatipaka-Kondapalli plus Lingala network.
GAIL had submitted to PNGRB that the tariffs for the Tatipaka-Kakinada-Kovuur network and Tatipaka-Kondapalli pipeline network were determined by the Tariff Commission before the regulator came into existence. For the Lingala and Gopavaram isolated fields, a fixed tariff was being charged.
The network was to carry 16 mmscmd of gas, but was getting only 6 mmscmd as availability was an issue. Therefore, if the order is based on the assumption of gas supply of 16 mmscmd, it would not be fair to the transmission company, some reports indicate.