Govt Looks To Split GAIL Into Two Units, Separate Marketing Operations

Govt Looks To Split GAIL Into Two Units, Separate Marketing Operations

Amid talks of merger of public sector oil and gas companies, the government is considering a proposal to split GAIL (India) with the marketing operations spun off into a separate company. Sources told TOI that the plan is being discussed in the petroleum ministry as the Centre is unhappy with the state-run player’s performance in building a pipeline network in addition to a possible conflict of interest in its role as the infrastructure provider as well as a carrier.

“It is like building a road and also deciding who can ply and at what cost,” said a source, who did not wish to be identified. The plan to split the company, which was set up mainly to develop gas sector infrastructure in the country, has been discussed in the past too, including by Atal Bihari Vajpayeegovernment, but it did not materialise.

Natural gas transmission and marketing are the core businesses of the PSU, which has also diversified into petrochemicals and renewable energy. Last year, GAIL earned over 70% revenue from marketing operations, while over 40% of the profit came from natural gas transmission. The discussions come at atime when the government is working on completing ONGC acquisition of Hindustan Petroleum Corporation to bolster both the entities. Read More…

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