State-run gas transmission monopoly GAIL (India) Ltd will spin off its marketing business into a separate firm from 1 April to comply with guidelines set by the petroleum regulator. Other businesses such as petrochemicals and telecommunications will remain with GAIL, the company said.

"We have already separated accounts for transportation and marketing businesses. Now, the two entities will be legally separated from next financial year GAIL chairman and managing director U D Choubey was rerported to have said in New Delhi yesterday.

The company's business portfolio includes natural gas pipelines of about 7,000km across 11 states, with a transmission capacity of 148 mscmd, it said. Its natural gas trading business, which contributed 58 per cent to the revenues in 2007-08, could be transferred to GAIL Gas, the new entity, but no decision has been taken, the paper quoted an unidentified official as saying.

The policy guidelines drawn up by the Petroleum and Natural Gas Regulatory Board require splitting of the company's gas transportation activity from its marketing and trading business. The aim is to curb the ability of integrated companies like GAIL to cross-subsidise its activities, leading to unfair competition.

GAIL India will remain a gas transmission company and will construct cross-country pipelines to transport gas, while GAIL Gas Ltd will carry out marketing business. GGL will be listed on the domestic bourses soon, the report said.

Gas transportation target upped
Meanwhile, GAIL India Ltd has increased its gas transportation target by 16 per cent for the fiscal year starting April, anticipating new production from offshore fields.

The producer plans to transport 94.8 million cubic meters a day of gas in the year, GAIL said in a statement to the Bombay Stock Exchange on Thursday.

Gas production from areas in India will increase after Reliance Industries Ltd starts production from its field in the Bay of Bengal next month. The field off the east coast may double gas availability in India in a year and a half, Oil secretary R S Pandey said yesterday.

GAIL will meet the target of transporting 81.5 million cubic meters a day in the year to 31 March, Choubey said. The plan is to market 83.2 million cubic meters a day compared with 70 million cubic meters this year, he said.

Reliance agreed in December 2007 to move part of the natural gas from the Krishna-Godavari fields through pipes owned by GAIL to avoid duplication of costs. The accord allows Reliance access to 6,700 km of pipelines.