GAIL bifurcation plan put on hold; co to monetise pipelines through InvIT
The Oil Ministry has put on hold a plan to bifurcate state-owned gas utility GAIL (India) Ltd so as not to dilute the firm’s ability to finance the massive infrastructure building plan, a top official said on Thursday. GAIL is India’s biggest natural gas marketing and trading firm and owns 60 per cent of the country’s 26,284-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.
“GAIL has massive plans to double its pipeline network to 34,000-km and there is a realisation that its ability to borrow funds to fund these should not be hampered,” the ministry official involved in the decision-making process said.
The plan was to transfer pipeline business into a subsidiary, while GAIL was to hold the core business of marketing natural gas and petrochemical production.
“The subsidiary may not have been able to raise the funds at rates which a combined balance sheet of GAIL can get,” the official, who wished not to be named, said.
