Uniform tariff comes under fire from buyers-IV: What is the proposal all about
Oct 03: Find out more on what GAIL's proposal is all about. 8The proposal calls for a unified pooled tariff, wherein the overall capital expenditure (Capex) and operating expenditure (Opex) are to be pooled and distributed over the pooled volume of the inter-connected cross-country natural gas pipeline system. 8Such calculated tariff may then be made applicable on Zonal or Postal basis to various customers 8GAIL's argument is that a unified tariff will do away with levy of multiple tariffs over multiple pipelines which will allow for the creation of a uniform gas platform across the country. 8While unification of tariff and its sharing amongst entities may be a new concept for gas sector, in the power sector, the CERC already provides a mechanism for integrating interstate transmission lines under one network, GAIL has argued. 8The new tariff also removes the distortion in the tariffs being paid by the existing customers connected to present infrastructure in relation to new customers that shall be connected through new infrastructure. 8At present, tariffs are fixed separately for each pipeline, thereby making the cascaded tariffs unaffordable to customers in far end of pipelines. Also, new customers are required to pay much higher tariffs when compared to old customers. For example, a new customer in Punjab who is connected to DBNPL pays about 370% higher tariff as compared to a customer in zone-I of the old HVJ pipeline. Further, customers of old pipelines with low tariffs have also been enjoying the benefits of relatively cheap domestic gas for about 30 years, whereas the customers of new pipelines are required to bear not only higher transportation tariffs but also costlier imported gas. 8But clearly the main aim of this entire exercise is the salvage the Jagdishpur-Haldia-Bokaro-Dhamra Pipeline. The anticipated tariff for JHBDPL (after duly considering 40% capital grant) alone would work out to Rs.1 14/MMBTU, and charging further additive pipeline tariffs from various gas sources would result in cascaded tariff up to Rs. 210/MMBTU. Such high tariff rates will make the pipeline unviable for users. 8GAIL's argument has found no takers among existing gas buyers. "It is ridiculous that just to be able to make one expensive pipeline viable, when it is unviable on its own right even after a big subsidy infusion, other pipelines are now sought to be made unviable," a prominent gas user in the fertilizer sector told this website. Click on Report.