India May Split Gail into Two

India is toying with the idea of splitting its biggest gas infrastructure and marketing firm, Gail, into two units, Times of India reported January 4 citing sources.

The marketing business could be spun off into a separate company, the report said. Sources told Times of India that the plan is being discussed in the oil ministry as the government is unhappy with Gail’s performance in building a pipeline network in addition to a possible conflict of interest in its role as the infrastructure provider as well as a carrier.

"By this time the entire country should have had a pipeline network, but we have been very slow," said a source.

The Narendra Modi-led government is keen to expand use of natural gas to tackle air pollution in urban India. The government wants gas to have 15% of the primary energy market in the next five years, up from 6-7% today. This will mean more LNG and pipeline gas, especially in the underserved east Indian states.

Gail is presently working on the ambitious natural gas pipeline project in east India, the 2,655-km long Jagdishpur-Haldia and Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project. No decision will be taken before all the stakeholders have been consulted, the sources said.

Last month, Indian oil minister Dharmendra Pradhan said that state owned refiner and oil marketing company Bharat Petroleum Corporation (BPCL) had written to the oil ministry proposing its integration with Gail and Oil India.