Govt to empower gas regulator

Putting its estranged relationship with the Petroleum and Natural Gas Regulatory Board (PNGRB) behind, the government is likely to notify Section 16 of the PNGRB Act, which empowers the regulator to authorise gas pipelines and the city gas distribution (CGD) network in the country.

The Union law ministry has cleared a proposal by the petroleum ministry to notify the section. “We had sought an opinion from the law ministry if we should go ahead with the notification after the legal dispute related to non-notification of Section 16,” said a petroleum ministry official.

A notification is expected soon.
 

MORE TEETH

• The law ministry has cleared a proposal by the petroleum ministry to notify Section 16 of the PNGRB Act, which empowers the regulator to authorise gas pipelines and city gas distribution network
• The Delhi High Court had struck down the powers of PNGRB to issue authorisation for CGD projects, as Section 16 was not notified
• The HC judgment had put a question mark on the rollout of the CGD network, at a time when the domestic production of natural gas had doubled to 140 mscmd
• Companies like GAIL Gas, Reliance and Adani had already made significant investment in the CGD business

The Delhi High Court, in its order dated January 21, had struck down the powers of PNGRB to issue authorisation for CGD projects as Section 16 was not notified. The section authorises the regulator “to lay, build, operate or expand a city or local natural gas distribution network”. Though the order did not mention trunk pipelines, authorisation for such pipelines is part of the same section.

The Ministry of Petroleum and Natural Gas did not notify the section when the Act was notified on October 1, 2007. The HC judgment had put a question mark on the rollout of the CGD network, at a time when the domestic production of natural gas had doubled to 140 million standard cubic metres a day (mscmd) on account of the output of gas from the Krishna-Godavari (K-G) basin. Companies like GAIL Gas, Reliance and Adani had already made significant investment in the CGD business.

Indraprastha Gas Ltd, which claimed a pre-PNGRB authorisation for CNG operations in Ghaziabad, and Voice-of-India, a non-government organisation, had challenged PNGRB’s power in the Delhi High Court to issue authorisation for the CGD network. The central government also told the court that the Board was “not currently empowered to issue authorisations”.

In March-April 2009, the board had issued city gas licences for six cities — Kakinada in Andhra Pradesh, Mathura and Meerut in Uttar Pradesh, Kota in Rajasthan, Dewas in Madhya Pradesh and Sonepat in Haryana.

In the second round, it invited bids for seven cities — Allahabad, Ghaziabad and Jhansi in Uttar Pradesh, Shahdol (Madhya Pradesh), Rajahmundry and Yanam (Andhra Pradesh) and Chandigarh, but did not award any licence following restraint from the court.