Gas prices: GAIL refutes ministry's claims about unnecessarily high transportation tariffs

Responding to queries made by the petroleum ministry regarding why GAIL's transportation tariff as a percentage of base gas price was as high as 68%, the country's premiere gas distributor said that transportation costs were much lower, in the range of 9-15% of the base price for gas.8The maximum average transportation tariff -- determined by last zone tariff -- charged by GAIL for each category of gas is Rs 1,100 per mscm (million standard cubic meters). 8The following are the prices of the different categories of gas, along with the corresponding percentages of transportation tariff with respect to base prices:

--APM and KG-D6 gas: Base price - Rs 7,428 per mscm; Percentage of tariff in total price - 14.8%

--PMT (Panna-Mukta-Tapti) gas: Base price - Rs 10,134 per mscm; Percentage of tariff in total price - 10.85%

--RLNG: Base price - Rs 12,120 per mscm; Percentage of tariff in total price - 9.07%8Citing the above data, GAIL has bolstered its argument that the tariff component of total gas price is never as high as 68%, as suggested by the ministry.8However, the distributor pointed out that due to PNGRB's zonal tariff system, customers receiving RIL's KG-D6 gas in the Northern region were paying tariffs to both RGTIL (Reliance's infrastructure wing) and GAIL for transporting gas through their respective pipelines. This resulted in the tariff component working out to around 25-30% of total gas price.8Pertinently, as reported in this website on December 21, 2010, the PNGRB has already rejected GAIL's appeal for implementing a postalised or network based tariff which could reduce the cascading effect of zonal tariffs. The regulator said that this proposal was out of tune with the present system of tariff regulations.