GAIL to implement integrated natural gas pipeline tariff of Rs 58.61/mmBtu

The integrated natural gas pipeline tariff was introduced to provide access to natural gas in far-flung areas at competitive and affordable rates.

The integrated natural gas pipeline tariff of GAIL (India) would be Rs 58.61 per metric million British thermal unit (MMBtu), according to a notification by Petroleum and Natural Gas Regulatory Board (PNGRB) on March 22.

The new tariff, which is 45 percent higher than the current tariff, will come into effect on April 1, 2023.

This comes after PNGRB earlier in the month had proposed a 41 percent increase at Rs 60.92/mmbtu for the state-owned gas distribution company.

The oil sector regulator then held an open house session inviting stakeholder comments regarding the unified pipeline tariff for GAIL.

In November 2022, PNGRB also introduced an integrated natural gas pipeline tariff to provide access to natural gas in far-flung areas at competitive and affordable rates.

The Indian government aims to boost the consumption of natural gas in the country and increase its share in the country’s energy basket from 6.2 percent to 15 percent by 2030.

Meanwhile, spot liquified natural gas (LNG) prices have dropped in the recent period and almost halved to $14 per metric million MMBtu due to a milder winter and relatively high inventory levels in Europe. This compares to a recent high of $45 per mmBtu.

Weak demand in China, one of the largest consumers of natural gas in the world, due to the strict COVID-19 lockdown, has also dragged prices lower.

Brokerage firm CLSA said in a report that Indian city gas distributors such as Gujarat Gas, Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL) should see stronger margins in the fourth quarter of the current financial year (FY23) with the recent decline in prices.

Indian LNG consumption rebounded by 3.1 percent in January to 65.5 mmscmd (million standard cubic feet per day) compared to the previous month, according to the CLSA report. A 31 percent month-on-month (MoM) cool-off in spot LNG price was to drive a further recovery in February, the report said.