Liberal marketing margin policies for imported LNG; Gail

GAIL India has asked the government to keep the marketing margins policies deregulated for imported liquefied natural gas (LNG) sales, for the various risks attached to the imports. The gas utility has served a letter to the government for seeking an exemption for the same, after the oil regulator decided to fix the marketing margins on sale of natural gas, last week.

GAIL has argued that imported LNG may differ in costs from domestic LNG, considering the foreign exchange volatility and price movements. The company fears that it may stand to lose its price competitiveness, if marketing margins are regulated by the oil and gas regulator. Currently, such margins depend upon negotiations between buyer and sellers.

In the letter, it wrote to government, GAIL as per media reports said "Keeping in view the long standing shortage of natural gas in the country, and in order to encourage gas imports, the Central Government has taken pro-active steps and as a policy has kept import of LNG under Open General License category and has always permitted the entities to market regassified-LNG (RLNG) at market determined prices.

"Therefore, our impression is that the Government would continue to permit the entities to market RLNG at market determined prices, including its marketing margin, so as to cover corresponding associated costs and risks," GAIL added.

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