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GAIL to be Bifurcated; Pipeline Business Expected Not to be Sold Before 2022

  • 15-Oct-2019
  • Journalist: Patrick Knight

To address the frequent clashes arising due to same company handling two operations, India's biggest natural gas marketing and trading firm, GAIL is proposed to be bifurcated. The Union Cabinet would soon consider a proposal to transform GAIL (India) Ltd.’s pipeline business into a 100 per cent subsidiary.

GAIL owns more than two-thirds of the country's 16,234-km pipeline network, giving it a stronger control over the Indian market. There have been frequent complaints by the natural gas users about not getting adequate access to GAIL's 11,551-km pipeline network to transport fuel. The proposal is expected to be approved by the Cabinet this month or by the month of November. After seeking approval, a consultant will convert the pipeline business into a separate subsidiary which might take 8-10 months.

Selling of the pipeline subsidiary to investor is not likely to take place before 2022 as the gas market will not be mature before that and GAIL would require government support for building a national pipeline network. Canadian asset management company Brookfield that recently purchased a 1,480-km pipeline from Mukesh Ambani's Reliance Industries (RIL), is likely to take over the pipeline business.

 

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