The Pipeline Czar

The story of hydrocarbons in India can make for a typical twin brothers bollywood movie, wherein due to some dramatic reasons one is always pampered, while the other always treated badly (no i am not taking sides here in the ambani brothers feud, I leave it to our honorable ministers). Both being hydrocarbons, oil & gas, due to close price movements and end usability is sometimes wrongly considered as perfect substitutes. But, the infrastructure required to extract and distribute them pose different challenges as one is liquid while the other gaseous. Hence different regulatory implications are needed, while in India we already have one for oil, the market structure for gas is still in a nascent stage. India faces a humungous infrastructural task of laying large pipelines to transport gas. These pipelines if owned by a single largest player can lead to monopoly. One look at Russia & the former USSR nations will help us understand the geo-political and economic clout these pipelines enjoy in the region. In the case of India due to populist regulations oil has always been the badly treated child while gas despite the need for regulation has been the pampered child so far. The company here in question is Reliance Gas Transportation and Infrastructure Ltd (RGTIL) which has already got a monopoly in the pipeline business. The company with an estimated revenue potential of $2-2.5mn a day for transporting gas through its 4430km of pipelines running across the country is owned by the elder Ambani, which he bought for a paltry Rs. 5 lakhs.  It is high time that the government set up a regulatory mechanism to regulate the pipeline grid in the nation or else, as it happened in post soviet Russia the country will fall into the hands of pipeline Czars.