 "Mahanagar Gas Limited (MGL)")
Mumbai-headquartered Mahanagar Gas (MGL) is looking to make the most of the new amendments to the Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006, aimed at ending the monopoly of existing city gas distributors (CGDs) in their respective areas. Promoted by GAIL (India), MGL operates in several areas of Maharashtra.
Speaking with Business Standard on the sidelines of India Energy Week in New Delhi, Ashu Shinghal, managing director of MGL, said that when the sector opens under the Act, they will get at least a 12 per cent return on their investment.
“We will have an opportunity to go and work in other geographical areas. It doesn’t harm us, but we are in court because the Act needs to be followed as it is written, and it cannot be one-size-fits-all. The Act has the provisions, but the regulations need to be framed in line with that. We are in favour of whatever the Act states because the government has been doing so much for the CGD sector, and we do not want to hinder that development process,” Shinghal said.
Back in 2015, the process of declaring certain CGD areas as common carriers began. However, since the process was not automatic, the regulator, in 2020, created guiding principle regulations based on which individual areas have been declared common carriers.
The Guiding Principles for Declaring City or Local Natural Gas Distribution Networks as Common Carrier or Contract Carrier Regulations, 2020, were notified in September of that year. The ‘common carrier’ principle allows all producers and consumers access to fuel transport infrastructure by appointing independent gas pipeline operators.
The new regulations aim to end the monopolies of CGDs in 54 urban areas where their exclusivity period has already expired. For Delhi and Mumbai, this period ended in 2012. However, courts have called the action ultra vires and pulled up the regulator for acting beyond its legal power and authority.
A series of legal actions initiated by PNGRB against legacy CGD players like Indraprastha Gas and MGL have been struck down in court. However, a long-pending amendment to the PNGRB Act, 2006, expanded last year, will give the sector regulator the legal authority to enforce its plan to reclassify natural gas pipelines as ‘common carriers’ and provide more clarity on handling ongoing litigation, Business Standard reported last year.
“We do not see it as a big game changer. We are ready for it. As the matter is sub judice, we do not want to say much. But it is an opportunity for us to enter other areas, just as it is for others to operate in our area,” Shinghal said.
Regarding potential expansion areas, Shinghal did not specify any but said regions with high industrial and commercial loads would be preferred. “For example, in states like Gujarat, where industrial consumption is high, we will look at similar areas,” he said.
Currently, MGL’s highest growth comes from the industrial and commercial segment, at around 14 per cent year-on-year, Shinghal said. In the compressed natural gas segment, growth is at 10 per cent, followed by piped natural gas at 7 per cent.
