Regulator hikes hauling tariff for Gail, Reliance Gas in ‘haste’

NEW DELHI: The downstream regulator has fixed a higher gas transportation tariffs for two pipelines owned by Gail India and Reliance Gas Transmission & Infrastructure (RGTIL) without public consultations and with undue haste some members of its board have alleged.

Credit rating agency CARE estimates this tariff structure will help Reliance Gas Transmission mop a revenue of about Rs 5,400 crore in 2010-11 .

“The board brushed aside suggestions of some members that consumers (of natural gas) should be heard before tariffs are fixed,” an official in the Petroleum & Natural Gas Regulatory Board (PNGRB ) said.

Pipeline tariffs are an important part of input costs for consumers of natural gas such as power, steel and fertiliser firms. As a pipeline developer enjoys monopoly, the regulator fixes gas transmission tariffs to protect consumers’ interest.

PNGRB secretary RP Watal and the office of its chairman, Mr L Mansingh didn’t respond to an email query by ET.
While a spokesman of Gail declined to comment on the issue, Reliance spokesmen maintained silence over the issue.

A member said that the Regulator’s board rejected another suggestion of a member to corroborate private consultants’ validation of companies’ capital expenditure in laying pipelines.

“Both capital cost and operating parameters have to be reviewed by experts before fixing tariffs. Compression ratios are key,” a former energy expert of the Planning Commission, who didn’t wish to be named, said. Pipeline tariff is a function of capital costs (numerator) and capacity (denominator), therefore, the board should validate capital costs by a third party like the Tariff Commission, the member told the board.

Members also asked the board to wait till capacity of pipelines are ascertained before fixing tariffs , a PNGRB official present in the meeting said.

“It is true that there were some dissents, but the board decided against them,” another board member said on condition of anonymity.

The board also rejected some members’ advice to allow two companies to charge only 65% of their proposed tariffs till it validates capital expenditure as well as capacity, he said. PNGRB has five members including chairman. Members of the board are LK Singhvi, BS Negi, Sudha Mahalingam and YPC Dangay.

On April 19, the Board fixed a provisional tariff of Rs 52.23 per million British thermal unit (mBtu), 2.6% lower than Reliance Gas Transmission & Infrastructure’s proposed tariff for its East-West pipeline.

On the same day it fixed tariffs for Gail’s two pipelines — Rs 25.46 per mBtu for HVJ-GREPDVPL (28% lower than tariff proposed by the company) and Rs 53.65 per mBtu for DVPLGREP (13.6% lower than the company’s proposal).