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D.K. Saraff: Will hope turn to disappointment?
Nov 08: There are visible changes in the manner of functioning of the PNGRB after D.K. Saraff took over as the PNGRB chairman. This goes to prove that appointing an experienced oil & gas hand is better than putting a dyed-in-the-wool bureaucrat in charge of a specialized body such as the PNGRB.
8Saraff has been quick off the ground, having pushed one CGD round and now plugging for one more.
8He has also come out with an suo moto notice for a cross country pipeline, from Mumbai to Angul in Odisha, via Nagpur.
8But Saraff needs to be careful too. Particularly in tariff hikes to pipeline companies. The bottomlines of GAIL and Gujarat Gas have soared after the recent tariff hikes. The PNGRB is now considering a 40% tariff revision for the main pipelines of GAIL (HVJ & HVJ upgradation), that will result in a 13% increase in FY20 EPS of the gas monopoly. Further, implementing a single tariff formula will push GAIL EPS up by another 27%.
8Saraff must understand that his job is to be a regulator, to ensure that the system works not just for pipeline companies but also for hundreds if not thousands of gas consumers around the country, who will eventually have to bear the burden of his decisions.
8Surely, pipelines require an adequate return on investment but, equally, there is a need to end their stranglehold on transportation infrastructure. If Saraff is quick to provide tariff hikes, he must be strident in demanding a bifurcation of GAIL into its transmission and trading arms.
8He also needs to ensure a transparent mechanism by which the current crop of CGD companies pass on the benefits of subsidized gas prices to consumers. Their monopoly distribution rights need to be tempered too, so that these companies can earn the respect of their customers and not just of share brokers.
8Or else, Saraff will find that the hope vested on him to bring about much needed change will quickly turn to disappointment. By Aniruddha Sharma
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