India May Hive Off Gail's Pipeline Business: Report
The Indian government is looking to hive off Gail’s pipeline business into a separate entity and selling it off to strategic investors, Press Trust of India reported July 15 citing sources.
State-owned Gail is India's biggest natural gas marketing and distribution firm and owns more than two-thirds of the country's 16,234-km pipeline network. The sources told Press Trust that to resolve the conflict arising out of the same entity owning the two jobs, bifurcating Gail is being considered. The government has a 54.89% stake in the company.
The sources said the strategic partner will operate the pipelines and give access on a non-discriminatory basis to any entity wanting to transport gas either from a natural gas field or an LNG import terminal to consumers. Gail already keeps separate accounts for its gas pipeline and marketing businesses, making it easier to split them into two entities, Press Trust said.
In May this year, Gail said it is at present executing around 5,500 km of pipeline related projects to provide gas supply largely to areas of eastern and southern parts of the country. Another 1,400 km pipeline involving capex of Indian rupee 70bn is under evaluation, which is targeted to be completed by 2023.
The flagship project that is being executed by Gail is the 2,650-km Jagdishpur-Haldia & Bokaro-Dhamra Natural Gas Pipeline (JHBDPL), also known as Pradhan Mantri Urja Ganga, which will pass through the eastern Indian states of Uttar Pradesh, Bihar, Jharkhand, West Bengal & Odisha. The pipeline is being further extended from Barauni to Guwahati in the northeastern state of Assam through a 729-km pipeline.