Govt plans to launch rules to end gas distributors' monopoly in 34 areas

The government is set to introduce rules in six months that could lead to the phase-out of monopolies controlled by natural gas distribution companies in 34 cities, including New Delhi and Mumbai, allowing many consumers to choose a new supplier, a regulatory official said.

In 2009, natural gas supply regulator — the Petroleum and Natural Gas Regulatory Board (PNGRB) — gave exclusive gas marketing rights, initially for five years, to companies which had established gas distribution networks across cities.

It allowed them to use their pipelines exclusively for 25 years to help them recover billions of dollars they had invested. However, now one of the three members of the PNGRB's board said the regulator is soon moving to open up the still relatively new business to competition.

“These companies have more than recovered their costs as indicated by their profitability and market cap,” said the board member, Satpal Garg, who is in control of its commercial and monitoring responsibilities. 

The rules will be ready in three months, and implementation would take another three months as the regulator will first seek feedback from companies and the public, Garg said.

The move could affect the business of GAIL (India),  the biggest gas distributor in the country. GAIL has direct or indirect control of many of the single-city distributors, such as Mahanagar Gas in Mumbai and Indraprastha Gas in New Delhi.