The tariff for natural gas pipeline is set to go up substantially later this month with the oil sector regulator likely to take a final call on the pricing. The move can have an impact on the user industry, including city gas projects and CNG.

“The views of GAIL India and user industries are being studied and a final decision on the pipeline tariff could be taken within the next few days,” sources in the Petroleum and Natural Gas Regulatory Board (PNGRB) said.

The focus is on GAIL’s Hazira-Vijaipur-Jagdishpur and Dahej-Vijaipur (HVJ-DV) pipeline; and a separate Dahej-Vijaipur (DV) pipeline.

The regulator is expected to take a call on tariff for both these pipelines, which account for over 70 per cent of the company’s transmission volume and are key to its earnings.

The state-owned transporter has sought a hike to Rs 175.20 per mBtu from Rs 25.46 per mBtu in HVJ and to Rs 88.09 per mBtu from Rs 53.65 per mBtu in DV.

Stating that such a tariff would be highly inequitable for the users of the HVJ system compared with DV, GAIL said the “final levalised tariff of Rs 97.04 per mBtu for the HVJ integrated system be considered by the regulator”.

The firm stated that such a levelled tariff structure would help the gas users of standalone HVJ as the rates would substantially come down, and would undergo marginal upward revision for DV users, it said.

However, the tariff proposed by GAIL has been opposed by its subsidiary IGL. “As the tariff increase sought by GAIL would have an adverse financial implication for a vast number of customers… in case of any revision, the PNGRB may moderate the transmission tariffs on prospective basis only by adopting a rational approach of considering HVJ and DV as an integrated system,” IGL said.

Reliance Industries opposing the tariff proposed by GAIL said, “Customers of DV cannot be unfairly burdened… the proposed tariff for the integrated network is higher than the proposed standalone DV network. This would imply that customers of DV would cross-subsidise the customers of HVJ network, which as a principle was earlier rejected by the regulator while fixing the provision tariff (in 2011).”

“The same principle is followed and the integration of pipeline network should not result in higher integrated network tariff in comparison with standalone tariff for the DV network,” Reliance said.

Nomura in a report said “based on recent tariff orders for seven pipelines, a tariff hike of 40-50 per cent looks likely”.