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GAIL and GSPL Poised to Reap Benefit from New Gas Pipeline Tariff Rules

Due to the amendment in tariff regulations, GAIL and GSPL will be enabled to implement a gradual escalation in tariffs on an annual basis.

December 1, 2022

gas pipelines
Gas Pipelines

The new notification by Petroleum and Natural Gas Regulatory Board (PNGRB) regarding rules on natural gas pipeline tariff, which became effective on November 18, will bring several positive amendments for the natural gas transmission sector, as per media reports. The pipeline operators – GAIL Ltd. and Gujarat State Petronet Ltd. (GSPL) are poised to benefit from the amended regulations.

These regulations will be implemented both for gas pipeline tariffs as well as pipeline authorizations, according to the outlook expressed by analysts. These rules were initially proposed in August this year.

As per the new tariff rules, there is a discontinuation of the proposal to share 50 percent of the proposed incremental tariff revenue. This will be a positive change for the pipeline operators – GAIL and GSPL as it will allow them to pursue Brownfield capacity expansions.

Also, the gas transmission losses will now be considered while there was no such provision earlier. A gradual annual increase in tariff would be permissible.

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The changed regulations augur well for pipeline tariffs and should incentivize CAPEX, analysts said. Broking house Emkay says that the pipeline entities are largely satisfied with the amendments, as it paves the way for future expansion.

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