Why India cancels plans to privatise its pipeline network

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Why India cancels plans to privatise its pipeline network

Mon, 06/21/2021 - 09:48
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GAIL India website homepage (copyright by Shutterstock/Pavel Kapysh)
GAIL India website homepage (copyright by Shutterstock/Pavel Kapysh)

India’s state-owned natural gas supplier and pipeline operator GAIL has decided to cancel plans to hive of its pipeline business. At present, GAIL owns and operates some 13,200 km of natural gas pipeline, which accounts for around 70% of the country’s natural gas pipeline network. Until recently the Indian government had plans to hive off the company’s pipeline operations, to improve competition within the natural gas pipeline sector.

However, the proposals had faced increasing opposition from within the company because it provided a stable source of income, at a time when its natural gas marketing business has experienced fluctuations in global gas prices.

In addition, GAIL officers appreciated that profits from its current pipeline operations, were an effective way of funding the country’s expansion plans for the natural gas pipeline network. It is part of current government plans to increase natural gas share of the country’s energy mix from just 6.2% today, to at least 15% by 2030.

In addition, GAIL company officials had reported that the current pipeline network is underutilised, and there are no problems of lack of access by third parties to make use of GAIL national pipeline network.

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