Annexure I

Major points discussed on 4^th May 2020 on the support needed from PNGRB to enable the CGD sector’s revival following the Covid-19 pandemic

Background :

The City Gas Distribution companies engaged in the distribution of Natural Gas to the Transport, Domestic and Industrial sector are facing a turbulent time owing to the pandemic Covid-19 situation prevailing in the Country. The impact of this is intensifying with each passing day. Given the uncertainty prevailing at the current moment as also the continuing lockdown, it is difficult to assess the economic impact for the CGD industry but it is bound to affect the progress of the various Projects in a very major way, as also pose serious cash flow and capital investment problems.  Many of the relatively new CGD companies got new GAs under round 9^th and 10^th round of bidding process, a few were in the midst of their tendering process, while a few were already engaged in execution activities, expanding their network in new GAs. Both these set of Companies had to stall their activities in view of Covid-19 pandemic. They are currently surviving majorly based on Domestic PNG sales and miniscule volume of CNG sales.

In view of the problems faced by the CGD sector, the industry urgently appeals to the PNGRB and the Regulatory authorities to extend its support through fiscal assistance and  easing of procedural norms as indicated below:

Support sought from the PNGRB

1. As per the current norm laid down under the 9^th and 10^th round of bidding, and under Minimum Work Program (MWP) clause, heavy penalty is imposed under default clause after the first year of operation. Due to the unforeseen and extended Covid-19 situation all the successful bidders have to recast their Minimum Work Program due to the variation that has grossly disturbed their initial assumptions. There has been a complete change in the entire business and social environment due to disruption of activities including vendors, supplier and contractors. It is, therefore, proposed that a deferment of atleast 24 months in MWP be allowed post lockdown period and till the restoration of normalcy period in the industrial activities.

2. Given the almost complete shutdown in the activities and steep decline in realizations, there should not be any coercive or penal action on the CGD entities who are already facing financial strains due to poor cash flow situation under Covid-19 pandemic situation.

3. To help generate finances for investment and ease the financial stress being faced by the CGD entities, PNGRB may consider financial assistance to the sector. This could be through PNGRB funding from their reserve and a relaxation/ rationalization in the Performance Bank Guarantee norms as a special case.

4. PNGRB is requested to immediately host the CGD Policy on their Webpage. This is a long pending issue and given the current unprecedented situation, it would greatly facilitate project implementation and the revival of the sector business if accepted by the State/Central Governments to follow a uniform policy in expansion of city gas network and adopt a uniform protocol and avoid delay as high as 10-24 months.

5. Quick revival of CNG sales are critical for the fast recovery of the sector. Mobile dispensing units provide a very useful solution to the issue. PNGRB may kindly assist the industry by taking up with PESO for swift clearance on this issue.

6. PNGRB may issue advisory note to the State Government to allow the CGD companies to continue work during the rainy seasons also, but strictly abiding by the laid down safety protocols.

7. PNGRB, in view of its position as Regulator and Industry Facilitator, is requested to recommend to the concerned Authorities that:
   • The prevailing rate of excise duty (14%) may be waived off on CNG
   • Deferment of Statutory Tax compliances till September- December, 2020

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Annexure II

List of Attendees in the web meeting held on 4^th May 2020