GAIL to hive off marketing business

26 March 2009

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.