Sarraf: Unified Tariff for Pipelines Needed to Make Natural Gas Affordable
A unified tariff for natural gas pipelines is needed to make gas affordable in areas away from gas sources, boost development in such regions and make some pipelines sustainable, the head of the downstream regulatory body said, defending its tariff proposal that has attracted wider industry criticism.
Industry has raised fears that the unified tariff would raise cost for consumers, incentivise imported LNG over locally-produced gas, make new LNG terminals less competitive against older ones, reduce competition, create barriers to entry, and damage the growth of the gas market in the country. “Infrastructure has to be built and sustained. How would Urja Ganga and north-east pipelines survive without this?” Petroleum and Natural Gas Regulatory Board chairman DK Sarraf told ET in an interview. “Nation needs to have balanced development across regions, for socio-economic reasons.”
Some industry players have opposed the proposed tariff structure on the grounds that it would force those located closer to the gas source to subsidise those in distant places. “Ultimately, as the volume grows, cross-subsidisation reduces and may even end. The alternative is, status quo, which is in no one’s interest,” Sarraf said.
Reliance Industries and BP have said the unified tariff puts domestic gas produced in the KG Basin at a disadvantage to the imported LNG. “This gas would largely get consumed in the eastern market, which is closer to the production centre once the east coast pipeline gets completed,” Sarraf said.
On the concern that the unified tariff would be disadvantageous to new LNG terminals on the east coast, Sarraf said: “West coast terminals are well connected to the grid and east coast terminals would cater to the eastern market”.
PNGRB is planning to introduce stringent pipeline access code, which along with gas trading exchange can help address the industry fears of a pipeline operator gaining dominance in the transmission market, Sarraf said.
