OIL & GAS

Explained: Why GAIL is dropping plans to hive of its pipeline business

State-owned natural gas marketer and pipeline operator GAIL will not hive off its pipeline business according to company and government officials. Petroleum Minister Dharmendra Pradhan had previously said the government was pursuing a separation of the two businesses to address issues of any conflict of interest posed by the gas pipeline major. The Indian Express examines why the plan was proposed, the opposition it faced, and why it was eventually scrapped.

Why was the government planning to bifurcate GAIL?

GAIL owns and operates a 13,200-km network of natural gas pipelines which accounts for over 70 per cent of the total natural gas pipeline network in India besides also being a gas marketer. The government had till late last year maintained that it was working on a plan to hive off the company’s pipeline business to address concerns of a conflict of interest of one of the largest pipeline operators also being a gas marketer.

What was the reaction by GAIL?

The plan faced stiff opposition from officers within GAIL who noted that the two businesses added stability to the company’s financials with the transmission business acting as a stable source of income when the gas marketing business was hit by fluctuations in international gas prices.

Source
Indian Express
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