Govtwants Gail to exit petrochem biz: Pradhan

Petroleum Minister Dharmendra Pradhan said on Monday the government wanted state-run Gail (India) to exit its petrochemical business.

On the other hand, contrary to the earlier reports of hiving off the company’s marketing division, the Gail board is planning to have marketing and pipeline segments as “independent and autonomous with separate balance sheets”.

“The Gail board has approached the government saying they are working on a similar proposal to have separate segments for pipeline and marketing. We want Gail to exit petrochemical business gradually and focus on its core area that is pipeline,” Pradhan said.

Under the Petroleum and Natural Gas Regulatory Board Act, marketing and transmission functions should not be performed by the same entity to avoid conflict of interest. This is because companies such as Gail are in a position to push their gas on priority, given that they also run pipelines as transmission entities.

Following the legal requirement, Gail did not spin off its marketing business but decided to maintain a split of its business and accounts for marketing and transmission businesses.

“Gail’s focus on pipeline business is required as around 30 million standard cubic meter per day (mmscmd) of natural gas is off grid due to lack of pipeline network.

“At the same time, we want Gail to be more aggressive on marketing too,” the minister said.