Regulations for city gas distribution common carrier system in three months, says PNGRB

The exclusivity of city gas distributors (CGDs) would come to an end in six months as the downstream regulator is planning to declare their network as ‘common carrier', which would force them to reserve a part of their capacity for a third party. The move would end the marketing monopoly of distributors such as Indraprastha Gas, Mahanagar Gas, Gail Gas, Gujarat Gas and more city gas distributors in at least 30 licence areas.

Petroleum and Natural Gas Regulatory Board (PNGRB) Member Satpal Garg told CNBC-TV18 that guiding principles for open market access will be put in the public domain in three months. And in three months thereafter, PNGRB will start ending the exclusivity enjoyed by city gas companies.

“Sometime in 2015, the process of declaring certain CGD areas as common carriers began. But because of litigation, we could not do it. The main issue was it was not an automatic process. PNGRB has to make guiding principle regulations and based on those, only individual areas can be declared as common carriers. We have started this process of making guiding principle regulations. The draft regulations are already put for public consultations and we have received public comments,” he said.

“If new players want to start marketing in a particular area, they will have to pay tariffs to authorised CGD companies. We need to fix tariffs on a cost-plus basis or by bidding route. That was the concept paper, which was floated by us. You can expect these notified regulations in a few months, maybe within three months’ time,” he added.

When asked what will be the impact of these notifications on the sector, he said: “We are anticipating two changes. One, it will create competition. However, it will be only to the extent of 20 percent because the authorised entity can still operate for 80 percent of the capacity. Second, it will expand the market. It will be a win-win for authorised companies and the new players.”

As many as 136 new geographical areas have been awarded under the 9th and 10th bidding round. PNGRB is expecting more than four crore new PNG connections and 8,000 plus new CNG stations, which will make the total number of CNG stations about 10,000. With the authorisation of so many geographical areas, 53 percent of the area and 71 percent of the population would get access to the CGD network.