PNGRB withdraws notices to declare 54 city gas networks as common carrier

The Petroleum and Natural Gas Regulatory Board (PNGRB) has withdrawn notices to declare city gas networks in 54 licensed areas as common carriers, which would help end a legal tussle between the regulator and the affected city gas distributors.

In April, the PNGRB had repealed its previous guideline on declaring networks as common carriers, which had formed the basis for notices to 54 city gas licensees in 2021, and replaced it with a new guideline. Since the old guideline was repealed, it decided to withdraw all those notices, the regulator said.

City gas licensees have been fighting the PNGRB in court over those notices. The withdrawal of notices will automatically persuade companies to pull out the cases, people familiar with the matter said. The regulator, however, may again move to declare the networks in the licensed areas that have long exceeded their exclusivity period as common or contract carriers, as it would be necessary to bring in fair competition among suppliers, cut costs for consumers, and enhance gas consumption in the country, the people said. India has set a goal of increasing the share of natural gas in the primary energy mix to 15% by 2030 from the current 6%. Any future attempt by the PNGRB to declare the city gas network as a common carrier too may get challenged in court as giving up monopoly means erosion of profit for licensees, an industry executive said. In March, oil minister Hardeep Puri said the full benefit of the reforms in the natural gas sector had not reached the end customer and that the government would take all measures to ensure compliance by city gas companies. The exclusivity period for both Delhi and Mumbai expired in 2012, according to PNGRB’s 2021 notice. Indraprastha Gas is the licensee for Delhi and Mahanagar Gas for Mumbai. Adani Total Gas‘ exclusivity for Ahmedabad expired in 2016 and Indian Oil-Adani Gas‘s exclusivity for Chandigarh ended in 2018, as per the PNGRB.

Licensees enjoy two kinds of exclusivity, according to the April PNGRB guideline. The first gives them exclusive rights to lay, build and expand supply infrastructure, and the second bars other suppliers from using that infrastructure. The second, also referred to as marketing exclusivity, is available for 6-8 years, after which a licensee’s supply network can be declared a common carrier, opening the doors for other suppliers to that market.

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