Govt scraps plan to split GAIL, company to monetise pipelines

New Delhi, June 9

A proposal to bifurcate state-owned gas utility GAIL (India) Ltd has been scrapped for now and instead the company will monetise some of its pipelines by selling a minority stake through InvIT.

GAIL chairman and managing director Manoj Jain said the company has sent a plan for monetising two of its pipelines to the Ministry of Petroleum and Natural Gas and an Infrastructure Investment Trust (InvIT) is possible within the current fiscal if approvals come soon.

Owns 75% of country’s network

• GAIL is India’s biggest natural gas marketing and trading firm and owns nearly three-fourths of the country’s 17,126-km gas pipeline network
• Sources said the proposal to split GAIL was dropped as the company had a large project pipeline in its network. A subsidiary may not have been able to raise the funds at rates that a combined balance sheet of GAIL can get

GAIL is India’s biggest natural gas marketing and trading firm and owns nearly three-fourths of the country’s 17,126-km gas pipeline network, giving it a stranglehold on the market. To resolve the issue, it was proposed that GAIL’s pipeline business should be hived off into a separate entity.

“There is no pending proposal in this regard,” Jain said at a call with reporters on the company’s earnings.

He was asked about the fate of the plan to transfer the pipeline business into a new subsidiary, with GAIL holding the core business of marketing natural gas and petrochemical production.

“We are initially monetising through InvIT. Proposals for InvIT for two pipelines have been sent to the ministry. Once it clears, we will start working on the monetisation plan,” he said.

Asked if this meant that the split plan was junked, he said, “it appears so.” “We are going for the pipeline-wise route (for monetisation) instead of the entire segment,” he said. He said GAIL will monetise some of its pipelines by selling a minority stake through InvIT.

The idea is to transfer pipelines with a steady revenue stream into a trust whose units can be sold to investors and the same can be traded on the stock exchange. This way, GAIL will upfront get money from such a sale that can be used for capital expenditure. — PTI

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