Downstream Oil & Gas Sector Caught in Regulatory Vacuum

Downstream Oil & Gas Sector Caught in Regulatory Vacuum

Only one serving member on PNGRB; no replacements yet after chairperson & 3 members retired

Lack of replacements for the retiring members in the past one and a half years has left Petroleum and Natural Gas Regulatory Board (PNGRB), the nation’s downstream regulator, with just one member, making the board dysfunctional that can potentially delay the latest round of award of rights to build pipeline in eight districts.

The board, formed under an Act of 2006, comprises a chairperson, a member (legal) and three other members appointed by the central government.Chairperson S Krishnan retired in August 2015 while three other members–PK Bishnoi, Kiran Kumar Jha and Subhash Chandra Batra (member-legal) –have retired in the past six months. Basudev Mohanty is the only serving member on the board now.

The board decides by a majority and its decisions don’t become invalid due to any vacancy, according to the Act. But since the quorum requires three members, the board can’t meet and decide on anything.

“This has impaired the working of the board and created a regulatory vacuum,“ said a source with direct knowledge of the regulator’s functioning.

The government had last year advertised for the position of PNGRB member but there is no clarity on its outcome. The oil ministry didn’t respond to ET’s email query on what it was doing to deal with these vacancies, and if there was a plan to replace PNGRB by another regulator for the energy sector.

PNGRB has a few other vacancies as well, including those of key advisors, for a long time, constraining its functioning, according to sources.

PNGRB’s job is to regulate the refining, transport and marketing of petroleum products, ensure enough supply across the country , protect consumer interest, foster fair trade, and authorise companies that would build and operate fuel pipelines.

The board has the power of a civil court and a bench compri sing member (le gal) and one or more members nominated by the chairperson decides on dis putes arising among the down stream compani es or with outsi ders. The absen ce of members has practically suspended this function of the board, said a so urce. Another effect of vacancies would be a delayed decision on the award of rights in the eight round to build and operate city gas networks in eight districts in Haryana, Goa, Puducherry, Uttar Pradesh and Maharashtra. PNGRB had invited bids in November and is accepting applications until February 23, following which the bids are to be examined and successful bidders awarded.

Another source said many other routine activities such as consultations with stakeholders on various proposals are unaffected due to vacancies.Only when a final decision has to be taken that the board is required, he said.

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