Free the Pipe and avoid Monopoly

We have a lot to learn from the Electricity Distribution model when we are on the anvil of launching a pan India network of Pipes for gas with the last mile connectivity to deliver to individual homes. Four major points emerge from the success as well as the failure of the National Power network. These are:

1. National Grid is best owned by a single operator who can not have distribution rights at the local level. This is to ensure that the pipes are not monopolised, which link gas wells and LNG terminals at port to City Bulk storage points, and bulk consumers. GAIL has to be given the mandate and the Gas Transmission tariff should be regulated. As in the case of the Power sector where Private participants invest in the formation of major national links, the Joint venture route with GAIL ownership up to 49 % shall be insisted up on.
   
2. City Distribution shall be sub divided to two segments - the main trunks which run across the city and the sub transmission which connect the trunks to individual consumers. We must avoid the model which we have in electricity, where when we are in the fourth year of reforms and are unable to free the wires for open access. It is therefore necessary to allocate city distribution to a minimum of three players for each city through a competitive bidding route as done in the telecom sector. The selected operator shall be mandated to build the minimum quantum of the Main trunk routes and the sub transmission network as required for servicing his consumers. The main trunks should be free to be used by the other Gas Providers by paying the transmission charge which can be regulated. While individual consumers cannot have the choice at this stage, this kind of structure will finally enable the pipe assets to be spun of to a separate company which may not have interest in distribution.
3. Metering has to be state of the art, along with the connected remote control mechanisms. This would facilitate dynamic pricing to reflect the global price trends and the foreign exchange rates. We need to encourage Pre Paid metering which would facilitate the consumers to move from the Cylinder era to the Piped era, with out complaining of high energy bills.
   
4. Finally Energy in India is subsidised and moving over to market related pricing quickly can enlarge the social disparities. It is therefore prudent to plan the network reckoning some element of subsidy which can be clearly traced to the beneficiary instead of "un metered Freebies" now being practised in the electricity sector.