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| Power to clear city gas projects may shift to Govt |
| Jyoti Mukul / New Delhi Feb 01, 2010, 00:04 IST |
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The power of issuing authorisation for city gas distribution (CGD) would revert to the Union government, Attorney General G E Vahanvati has told GAIL Gas Ltd.
This is a sequel to the January 21 order of the High Court here, which struck down the power of the Petroleum and Natural Gas Regulatory Board (PNGRB) to do so. The judgement had put a question mark on the roll out of the CGD network in the country, at a time when the domestic production of natural gas had doubled to 140 million standard cubic metres a day (mscmd).
GAIL had asked the AG to clarify the law after the verdict. It told him it had already implemented projects in Kota, Dewas, Meerut and Sonepat. “The fact that this was done under an authorized grant of the board and the further fact that the Delhi High Court had held that the board has no power to issue such an authorization does not render the work done illegal,” went Vahanvati’s opinion.
GAIL Gas, a subsidiary of GAIL India, and Bhagyanagar Gas Ltd, a joint venture of GAIL India, had won the CGD rights in bids for five of six cities last year. Another company, Saumya-DSM Infratech, had bagged CGD rights for Mathura.
The AG further noted that if the board (PNGRB) had no power to grant authorisation, “one would have to resort to the situation prior to the board’s assumption of such a power, which means that the power be vested in the ministry of petroleum and natural gas. There cannot be a vacuum.”
Based on the opinion, the authorised entities could now apply to the ministry for fresh authorisation. The ministry is likely to award fresh authorisation in consultation with PNGRB. However, no fresh bidding would take place till the power of the regulator was restored.
Speaking to Business Standard, L Mansingh, PNGRB chairman, said the companies had already started investing in CGD, since they enjoy exclusivity rights for five years from the day of being given authorisation and the sooner they construct, the more time they get to conduct exclusive business. Though Mansingh said the board had not yet decided on appealing against the judgement, he said the present situation could lead to a setback to the roll out of a CGD network. “As long as the Act stands, the ministry cannot go back to its old ways of nominating its own companies. With the High Court judgement, either the business will come to a standstill or there will be chaos,” he said.
The HC judgement had noted that the government had not notified Section 16 of the PNGRB Act that empowers the board to issue authorisation. “In view of non-notification... it is held that the board has no power to grant authorisation to entities which applied to it for laying, building, operating or expanding city or local natural gas distribution networks... this is in consonance with the Central Government’s stand in the counter-affidavit filed before this court,” said the order.
With the government planning to amend the PNGRB Act, the notification of the relevant section will happen only after the enactment, said a senior ministry official. “We may bring in the amendment Bill in the coming Budget session of Parliament,” he added.
According to the ministry, the amendment was planned to rectify lacunae in the Act. “Section 16 had a provision saying that those entities in the business immediately before the appointed day (October 1, 2007) shall be deemed to have such authorisation. Some companies got into the business in cities, like Jaipur, which are not even connected to the trunk gas pipeline, before that date just to take advantage of this provision. Since a section has to be notified in full and not in parts, the ministry felt the need to amend the Act before it notified Section 16,” said the official.
The amended section will bestow deemed authorisation only on the entities authorised or approved by the central government before the appointed day. The Centre, in consultation with the board, will be empowered to take a decision on entities which undertook certain work before the appointed day without being authorised by the Centre.
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