GAIL India, the state owned natural gas company, will split its marketing business into a separate company from April 1 in accordance with guidelines outlined by the petroleum regulator. While GAIL India will continue to be a gas transmission company and will construct cross-country pipelines to transport gas, GAIL Gas (GGL) will carry out marketing business.
GAIL Gas will also soon be listed on the domestic exchanges. GAIL India has already separated the transportation and the marketing businesses and from the next financial year onwards, the two companies will be legally separated. All allied businesses such as petrochemicals and telecom will remain under GAIL India.
GGL will take over GAIL India’s marketing activities like the city gas projects. The new entity will also distribute and market CNG for vehicles, piped natural gas for domestic or industrial use and and auto LPG both in India as well as abroad. It also plans to set up retail CNG and LNG outlets across the country. Currently, another state-owned enterprise Indraprsatha Gas is in this business.
According to the policy guidelines issued by the Petroleum and Natural Gas Regulatory Board, GAIL had to split its gas transportation business from the marketing and the trading business. The policy was drawn to prevent unfair competition that resulted from the ability of integrated companies like GAIL to cross-subsidise its activities.
Reliance has also separated its gas transmission and marketing businesses to comply with the regulatory requirements.