GAIL welcomes government proposal on levying marketing margin

October 1st, 2009 - 9:57 pm ICT by IANS  

New Delhi, Oct 1 (IANS) GAIL India Thursday welcomed the petroleum ministry’s proposal to allow it to charge marketing margin on sale of subsidised natural gas, saying it would help the company invest more in servicing bad debts and expanding markets.
“We are very happy that the government is considering it,” GAIL chairman B.C. Tripathi told reporters here.

The money raised will help the company meet its bad debts, arbitration costs and market development, he said.

Petroleum Secretary R.S. Pandey Thursday confirmed reports that the government was considering the proposal to allow GAIL to recoup its marketing cost for distribution of gas under the administered pricing mechanism.

The petroleum ministry has recommended this proposal to the cabinet for approval.

Tripathi said the gas major had been in talks with the government for the last two decades for permission to charge a marketing margin for the gas sold.

GAIL is allowed to charge a certain rate for the gas supplied from fields nominated by the government to Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL). This is known as the administered pricing mechanism, which regulates the price to insulate the consumer.

“We have certain marketing costs, mainly for creating awareness, talking to dealers and giving technical support. Even before we lay the pipeline, we incur costs in educating people,” Tripathi said.

He admitted that GAIL had raised the marketing margin from some customers, who later complained to the government.

“We had levied service charge as marketing margin. But, when the government said that no decision had been taken, we withdrew it,” Tripathi said.

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