GAIL India and Reliance Gas Transportation India Ltd (RGTIL) will have to make refunds to various gas consumers, primarily in the power and fertiliser sectors, when the Petroleum and Natural Gas Regulatory Board (PNGRB) approves the new gas transportation rates.
The Board has approved a provisional rate of Rs 25.46 per million British thermal unit (mBtu) for GAIL’s 2,800-km Hazira-Vijaipur-Jagdishpur or HVJ pipeline, 10.6 per cent lower than the current rate of Rs 28.48. The new rates would apply retrospectively from November 20, 2008.
The provisional rate of Rs 25.46 is much lower than the one of Rs 35.39 proposed by GAIL for the HVJ pipeline. GAIL, it is learnt, is pressing for a higher rate before the provisional one is finalised. The board, however, is unlikely to consider GAIL’s plea. “The rate can only come down further,” said a board official.
Various gas consumers in the power and fertiliser sector will get a refund or adjustment when the new rate gets finalised, after the companies send in the audited cost and financial data of the pipelines for the year ended March 31, the official said. Comments from various customers and stakeholders have also been invited.
Similarly, the Board has approved a provisional rate of Rs 52.23 per mBtu for the 1,385-km East West pipeline operated by RGTIL, a company owned by Reliance Industries’ chairman Mukesh Ambani. This is 2.62 per cent lower than the rate of Rs 53.64 being charged by RGTIL. In their case, the new rate, when finalised, will apply from the date of pipeline commissioning, that is, April 1, 2009. RGTIL had made a proposal of Rs 53.64 as the new rate.
Apart from being applicable retrospectively, these rates will remain valid for a year, after which the Board will fix these for a five-year period based on actual parameters. These provisional rates have been based on the expenditure incurred in construction, operating cost and a 12 per cent return on investment. The Board hired two consultants — Ernst & Young and Crisil — to evaluate the proposals.