The Indian government plans to introduce rules to phase out the gas supply monopolies of gas distribution companies in 34 cities, including Mumbai and New Delhi, within 6 months. The government will work on the rules within three months and they will be implemented in another three months.
In 2009, the Petroleum and Natural Gas Regulatory Board (PNGRB) attributed exclusive gas marketing rights over a 5-year period to companies having gas distribution networks in cities, along with exclusive rights to use the networks for 25 years, as a way to help them recover their costs. However, the PNGRB plans to open the market to competition, allowing consumers to choose a new gas supplier.
This decision should affect GAIL's activities, since the company is the large distribution company in India. The company has direct and indirect stakes in many of single-city distributors, such as Indraprastha Gas in New Delhi or Mahanagar Gas in Mumbai, which could now face competition. Indian Oil and Adani Gas, which were also awarded marketing rights in cities where they distributed gas, would also lose their gas supply monopolies.
The PNGRB recently awarded more than 130 city gas projects to large oil and gas companies including GAIL, Adani, Indian Oil, Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp and Ltd (BPCL) and to smallest companies. They will expend the size of gas distribution pipelines by 2/3 to provide piped gas to more than 22 million new domestic customers. India aims to connect 10 million households with piped gas by 2020.
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