Reliance Industries has told the downstream regulator that it didn’t favour an annual escalation in petroleum products pipeline tariff and would like it to be linked to railway freight rates instead.
Reliance shared its views during a stakeholder meeting on draft regulations on the determination of petroleum and petroleum products pipeline transportation tariff. The meeting, organised by the Petroleum and Natural Gas Regulatory Board (PNGRB), was attended by executives of Indian Oil, Hindustan Petroleum, GAIL and Reliance BP Mobility Ltd.
At the meeting, PNGRB “expressed displeasure” that oil marketing companies, which mostly controlled petroleum product pipelines, “were not supportive” in sharing data, according to the minutes of the meeting. “In spite of that, draft regulations aim to provide reasonable transportation tariff to the pipeline entities and also to protect consumers’ interest.”
The draft has proposed a tariff escalation of 3.4% every year for pipelines commissioned before the notification of the PNGRB’s tariff regulations of 2010.
“Reliance pointed out that with the proposed escalation of 3.4% in pipeline tariff, the pipeline tariff will surpass rail tariff by 2029, leaving little incentive for other users to shift to pipelines from rail and suggested to determine the tariff at 75%-80% of the rail tariff rather than an annual tariff escalation,” according to the minutes of the meeting.
Hindustan Petroleum (HPCL), however, said the rate of 3.4% may lead to “under recovery of investments/operational costs” and suggested a 5% escalation.
GAIL, the nation’s largest gas pipeline operator, suggested setting the escalation rate at 4.5% for the petroleum product pipelines in line with the natural gas transmission tariff or linking it to the wholesale price index of the previous five years.
Indian Oil Corp suggested that the proposed transportation loss of 0.05% was less than normal transportation loss and urged a review of the same. PNGRB sought data to back the company’s claim.