Splitting GAIL, Cabinet Considering Option, Pipeline Business Selling Too Under Consideration

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The Union Cabinet may by next month consider a proposal to hive off state-run gas utility GAIL (India) Ltd’s pipeline business into a separate entity but its sale to a strategic investor may not happen before 2022, sources privy to the development said.

GAIL is India’s biggest natural gas marketing and trading firm and owns more than two-thirds of the country’s 16,234-km pipeline network, giving it a stranglehold on the market.

Users of natural gas have often complained about not getting access to GAIL’s 11,551-km pipeline network to transport their fuel.

Sources said to resolve the conflict arising out of the same entity owning the two jobs, bifurcating GAIL is being considered.

After the Cabinet approval, a consultant will be appointed to transfer the pipeline business into a separate subsidiary. This would take 8-10 months to accomplish, they said.

However, selling off the pipeline subsidiary to a strategic investor is not likely before 2022 as the thinking in the government is that the gas market will not be mature before that and state support would be needed for GAIL to accomplish building a national gas pipeline grid.

A proposal is likely to be moved before the Union Cabinet for transferring the pipeline business into a 100 per cent subsidiary, they said adding the proposal may be considered and approved by the Cabinet this month or latest by November.