Low gas supply may hit GAIL's national grid plan

Shortage of gas, both in its natural and liquefied form, came up as a major cause of worry before the Parliamentary Committee on Public Undertakings.

Low gas supply is preventing full utilisation of GAIL (India) Ltd's pipelines, which could affect the viability of the proposed national gas grid being planned by the state-owned company.

Replying to the committee's queries, GAIL said the under-utilisation "� only around 63 per cent of the pipelines' capacity is currently being used "� was mainly due to insufficient supply of gas and LPG from the producers of petroleum products.

"The under-utilisation is because there is not sufficient gas being pumped into the pipeline network from the main producer, ONGC," GAIL told the committee.

The company, however, defended the national gas grid plans by saying the main interstate pipelines were being fully utilised and it was only the smaller networks in Gujarat, Andhra Pradesh, Tamil Nadu, Maharashtra and Tripura where around 37 per cent capacity was not being utilised.

GAIL also told the committee it was in talks with international players to import gas. The country's largest owner and operator of gas transmission networks "� it operates 5,470 km of pipeline "� also said talks were on with other producers of petroleum products to use its pipelines for transporting their products in order to attain full capacity utilisation.

The public sector company also said that its LPG pipelines were not being utilised by the oil marketing companies, which were transporting the product by rail and road.

Meanwhile, the Parliamentary committee also raised concerns over GAIL's profitability. The company said the discounts it was paying to downstream companies as part of the subsidy sharing scheme was hurting its financials.

"In earlier years, subsidy was between Rs400-500 crore. In the last financial year, the burden was as much as Rs1,100 crore," the company said.

Looking to unburden GAIL of the subsidy sharing expenses, the committee said the Rangarajan Committee recommendations regarding the government bearing the entire cost of the subsidy should be followed.

The committee said that if upstream companies continued to offer discounts on petroleum products they would continue to bleed, harming the country's energy security in the process.

The committee also raised concerns about the rising prices of crude oil. GAIL said that although gas makes up just 8 per cent of the country's energy consumption "� the Planning Commission expects this to go up to 20 per cent in the next 15-20 years "� it was in the process of securing long-term supplies of liquefied natural gas.

Besides owning gas blocks in Myanmar, under the New Exploration Licensing Policy (NELP), the company was also actively looking at setting up new LNG terminals and sharing existing ones.

"During the 11th Plan we will have the capacity to import 40 million tonne of LNG. This will definitely ease the pressure on liquid fuels as the primary source of energy," the company said.