Niti Aayog wants greater role for oil & natural gas board in upstream biz

Currently, the board regulates certain aspects of downstream business

The draft energy policy of the government has proposed enlarging the regulatory ambit of Petroleum and Natural Gas Regulatory Board (PNGRB). The policy draft proposes extending the remit of PNGRB over "selected statutory aspects of the upstream business, including HSE, data collection, joint development of reservoirs in adjacent blocks, sharing of infrastructure and promotion of acreages". 

Currently, PNGRB regulates certain aspects of the downstream business only, while the upstream sector is monitored by the directorate general of hydrocarbons (DGH). Both these organisations are not fully empowered to regulate the sectors. The draft, however, says, "The contract administration role of production sharing contracts will remain with the DGH. But for that, the former will have to be equipped with adequate and competent resources." 

India also aims to improve in several aspects, namely, competition between fuel sources on calorific parity basis (provided non-fuel economics is also neutral), ease of entry and exit for players, free consumer choice of vendor and market determined prices, among others says the draft. "However, many of these features evolve over time when conditions ripen." 

The draft policy also lists several new regulatory interventions like separation of content and carriage in electricity, city gas, liquid fuels at select locations and the sharing of energy infrastructure by including storages and marketing infrastructure, ATF hydrants, offshore infrastructure, LNG terminals and aviation fuel infrastructure, among others within the definition of ‘common carriers’. Besides these, the policy also made a case for granting choice of service provider for LPG, kerosene and electricity, among others. Moreover, data sharing especially in the area of oil and gas exploration was deemed important. 

"The existing regulations need to be expanded to address the needs of our energy market to usher in strong market framework. The existing regulators will provide for or clarify through regulations unbundling between gas transporters and marketers, overlap between jurisdictions relating to competition issues, adequate returns to gas pipeline developers in the initial years when the throughput is minuscule, induction of latest technology, robust data collection and dissemination, and health, safety and environment (HSE)."

Niti Aayog is preparing the national energy policy, the draft of which has been unveiled for public comments. According to Niti Aayog, the four key objectives of energy policy are access at affordable prices, improved security and independence, greater sustainability and economic growth. 

According to the draft, unlike other mature energy markets across the globe, the Indian energy regulators must undertake developmental role to help bring in more players, enhance availability, contribute to reducing entry costs and help different segments of the business integrate well. Several of these areas are already included in the regulatory statutes with poor implementation. "PNGRB is one example that has not been able to succeed in the rapid roll-out of CGD networks. The Indian energy sector has higher expectations from regulators as compared to the developed energy markets of the world where regulation is gradually giving way to open markets," says the draft.