GAIL is India's biggest natural gas marketing and trading firm and owns 60 per cent of the country's 26,284-km gas pipeline network, giving it a stranglehold on the market.
GAIL is India's biggest natural gas marketing and trading firm and owns 60 per cent of the country's 26,284-km gas pipeline network, giving it a stranglehold on the market.
New Delhi: The Oil Ministry has put on hold a plan to bifurcate state-owned gas utility GAIL (India) Ltd so as not to dilute the firm’s ability to finance the massive infrastructure building plan, a top official said on Thursday.
GAIL is India’s biggest natural gas marketing and trading firm and owns 60 per cent of the country’s 26,284-km gas pipeline network, giving it a stranglehold on the market. To resolve the issue, it was proposed that GAIL’s pipeline business should be hived off into a separate entity.
“GAIL has massive plans to double its pipeline network to 34,000-km and there is a realisation that its ability to borrow funds to fund these should not be hampered,” the ministry official involved in the decision-making process said.
The plan was to transfer pipeline business into a subsidiary, while GAIL was to hold the core business of marketing natural gas and petrochemical production. “The subsidiary may not have been able to raise the funds at rates which a combined balance sheet of GAIL can get,” the official, who wished not to be named, said.
Creating pipeline infrastructure, which will take the environment-friendly fuel to unconnected places in the country, is key to the government objective of making India a gas-based economy.
The government is targeting raising the share of natural gas in its energy basket to 15 per cent by 2030 from the current 6.2 per cent. The official said GAIL will monetise some of its pipelines by selling a minority stake through instruments like Infrastructure Investment Trust (InvIT).