The Hindu Business Line : Gas Industries Group to moot changes in draft petroleum Bill

PRIVATE sector and multinational gas companies hope to submit to the Government their proposals for changes in the proposed Petroleum and Natural Gas Regulatory Board Bill by next week.

The seven companies, including British Gas, ExxonMobil, Shell and Reliance, have formed a Gas Industry Group (GIG) to lobby with the Group of Ministers (GoM) for various changes in the regulatory bill and the draft pipeline policy.

" Ideally, we would have liked separate regulators for oil and gas. But even the present draft regulatory bill needs to clearly spell out some concerns," said Mr Nigel Shaw, CEO of British Gas and Convenor of the GIG.

Mr Shaw told reporters that the draft bill addresses the gas transmission business, but is silent on a lot of issues, including local gas distribution companies. The bill needs to lay down a clear framework of operating rules for players in the gas market. Also, the regulator should be independent and must have the power to issue operating licences, he said. The GIG, which has been meeting each member of the GoM, met the Petroleum Secretary, Mr S. C. Tripathi, last week, he said.

Among the concerns raised is that the bill allows the Government to reserve the right to give directives to the Regulator. "Although the Government has the right to do so, the specific areas in which it can give such directives need to be spelt out in writing," Mr Shaw said.

The companies will also ask for a detailed `affiliate' or a model code of conduct for pipeline operators. This is to ensure that there is no difference in how pipeline operators treat their own gas and that of competitors.

Clarity is needed on matters such as companies' obligation to reach gas to customers even in remote areas, he said. This has to be done regardless of economic viability, as the companies' obligation falls under the `retail service obligation.' Also, the Bill includes a `takeover clause' under which the Government can take over a gas business, but does not mention the specific condition under which it may do so.

Among the changes suggested for the draft pipelines policy are the basic principles of determining tariffs. The companies believe that the requirement for gas pipelines to be built with excess 25 per cent capacity should be done away with.

"A gas pipeline can be expanded through compression of gas volumes. That is what happens elsewhere in the world. This will mean that gas companies will have to raise tariffs to pay for the excess capacity if it is not used," Mr Shaw said.

The GIG is not in favour of the Government taking its share of `profit gas' from private sector gas producers so that GAIL can continue supplying subsidised industries such as power and fertilisers. He compared it with power subsidies for which electricity regulators have asked State Governments to pay producers and bear the subsidies.

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