GAIL plans to hive off pipeline arm as open access challenges market share

State-run GAIL is hiving off its transmission business into a 100% owned subsidiary, the company’s newly-appointed chairman and managing director Manoj Jain said. The decision to restructure the company comes in the wake of renewed push by the industry for more open access in gas transportation, which is seen to dent GAIL’s share in the fuel marketing business. Though the transmission business contributes to only about 7% of GAIL’s revenue, this business segment contributes more than 50% of the company’s profit before tax.

“The Union Cabinet is to take a final call on the decision and GAIL will be able to execute this division within a year the Centre approves it,” Jain added. The company operates a gas pipeline network of over 12,200 km and is in the process of adding another 9,000 km. It has over 70% share in the natural gas transmission market and contributes 60% of natural gas sold in India.