Press Releases

Press Release
[New Delhi, 8th march, 2006]

Marketing Margin

GAIL shall be discontinuing the levy of marketing margin on the sale of gas covered under the under the Gas Pricing Order dated 20.06.2005, following the communication from the Ministry of Petroleum and Natural Gas (MoPNG) to ONGC, GAIL and OIL that marketing margin shall not be levied on all category of consumers covered under the Gas Pricing order of 20.06.2005.

However it may be clarified that GAIL has been levying marketing margin only on those customers who are paying Market Related Price (MRP) in terms of the Gas Pricing Order of 20.06.2005 and not on those customers, to whom gas is sold at APM rate

The financial implication of less than Rs 40 crore on GAIL due to the discontinuation of the marketing margin on its MRP customers is expected to be substantially mitigated by the income from the sale of sweet crude from its Cambay basin oil field, the commercial sale of which has commenced from September 2005. The current level of 350 bbls/day sale from the Cambay fields is expected to go up to 600 bbls/day in the coming fiscal year and further stepped up to 1,400 bbls/day from the year after.

Currently, the marketing of gas in the country is being done by private players such as PMT JV and Gujarat Gas as well as State owned gas companies like GSPCL. We believe that these companies are charging marketing margin of around 10 to 12 cents per MMBTU to cover their marketing costs. For GAIL to be competitive in this market there should be a level playing field

The Tariff Commission has already addressed the issue of marketing margin on the sale of Regasified LNG (RLNG) in India and is currently examining the issue of domestic gas price. As was done in the case of RLNG, it is hoped that the Tariff Commission would also address the issue of marketing margin on sale of domestic gas as well