IOC, BPCL keen to buy Gail India

Oil Minister Dharmendra Pradhan on Wednesday said Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) are both keen to acquire gas utility Gail India, which as per the extant policy needs to be split by separating gas transportation business from its marketing unit.

IOC and BPCL have separately indicated to the petroleum ministry their interest in taking over Gail to add natural gas to their oil refining and marketing business.

In a written reply to a question in Rajya Sabha, Pradhan said Finance Minister Arun Jaitley in the 2017-18 Budget unveiled government's plan to create integrated public sector oil majors "through consolidation, mergers and acquisitions" so as that the merged company has "capacity to bear higher risks, avail economies of scale, take higher investment decisions" and is "able to match the performance of international and domestic private companies”.

"IOC and BPCL had written to the Ministry for integration with Gail (India). However, government has not taken any decision in this regard," Pradhan said.

To a separate question on splitting Gail, he said a decade-old policy provides for a natural gas transporter not having any interest in marketing of the fuel.

Incorporated in August 1984 by spinning off gas business of ONGC, Gail (India) owns and operates about 11,000-km of natural gas pipelines in the country. It sells around 60 per cent of natural gas in the country.

Pradhan said in 2006, the government issued the Policy for Development of Natural Gas Pipelines and City or Local Natural Gas Distribution Networks.

"In the long run and with the maturing of gas markets, it is envisaged in the policy that the authorised entities will have transportation of natural gas as their sole business activity and will not have any business interest in the gas marketing or city or local gas distribution networks," he said.

This open access to third parties should be given at transportation rates determined by PNGRB, he said.

The minister, however, did not say either way if the government was considering splitting Gail.