GAIL opposes move to regulate marketing margin for LNG; ok with control on domestic gas

State-run Gail India has opposed the government's move to regulate marketing margin for imported liquefied natural gas but accepted its control on domestically produced gas.
"We have taken up the matter with the government. An attempt to control marketing margin for regassified-LNG would discourage its import," Gail chairman & managing director BC Tripathi said.
Gail supports the government decision to regulate marketing margin for gas produced domestically as per the Supreme Court decision that the government is the owner of natural resources, Tripathi said.
Oil ministry officials, however, said that the government's directive to the Petroleum & Natural Gas Regulatory Board (PNGRB) would be applicable to "all marketers" of natural gas in the country including imported gas.
"The matter is with PNGRB and it will decide whether the marketing margin for imported gas should be regulated or not? The regulator is to protect gas consumers from a monopolistic situation where few companies own LNG and gas transportation facilities," a government official with direct knowledge of the matter said requesting anonymity.
ETwrote first on Dec 27 that the government had decided to regulate natural gas marketing charges levied by companies such as Reliance Industries and Gail to protect domestic consumers in the short-supplied market.
Reliance Industries had already sent a letter to the oil ministry questioning the legality of the government's move to regulate marketing margins for KG-D6 gas and told the ministry that such a step would be discriminatory as state-run firms also used a similar levy to cover costs and risks. It argued that the levy was purely a matter between buyers and sellers.
Rebuffing RIL earlier this month, the oil ministry had said that the petroleum regulator would determine marketing margins for all natural gas on the basis of costs.
Until now, marketing margins were negotiated between buyers and sellers. While Reliance charged $0.135 per unit marketing margin for supplying its KG-D6 gas, Gail levied $0.17 per unit for supplying imported gas and gas supplied from the Panna-Mukta and Tapti fields.
Gail also charges $0.11 per unit marketing margin on administered price mechanism (APM) gas, which was approved by the cabinet on May 31 last year. APM gas is produced from nominated fields operated by ONGC and Oil India, but Gail markets their output.
According to industry executives, marketing efforts include supply management, contract negotiations, market tie-up, market surveys, dispute resolution, customer facilities, risk of take or pay, expenses in the form of bad debts, inventory carrying costs and maintaining administrative infrastructure all over the country.