The Hindu Business Line : `Marketing exclusivity' likely for city gas suppliers

However, the period of exclusivity in retailing natural gas to households and compressed natural gas (CNG) to automobiles would be decided by the Petroleum & Natural Gas Regulatory Board (P&NGRB) depending on the investment, location, population, market growth in the area covered by the CGD network. The board will be set up soon.

Announcing the Policy for Development of Natural Gas Pipelines and City or Local Natural Gas Distribution Networks, the Petroleum Minister, Mr Murli Deora, said, "The Regulatory Board would be in place by January 2007 and decide selection of an entity to lay, build, operate or expand a natural gas pipeline or a city or local natural gas distribution."

The policy's objective is to promote investment from the public and private sectors in natural pipelines and city or local distribution networks, and to secure consumer interest, in terms of gas availability and reasonable tariff.

This was in sync with the demand made by players such as the state-owned GAIL (India) and Indian Oil Corporation and multinationals such as British Gas. However, it runs contrary to suggestions made by the Mukesh Ambani-led Reliance Industries Ltd and the Anil Dhirubhai Ambani Group.

At present, Mahanagar Gas Ltd and Indraprastha Gas Ltd are operating monopolies in Mumbai and Delhi, respectively. A section of the players also felt competition should be allowed by removing marketing exclusivity in the sector and had opposed even suggestions allowing exclusivity for a limited period.

Indications are that the exclusivity period might vary between three and five years. Issues such as open access, multiple players, pipeline capacities, transportation tariff, role of State governments, besides marketing and infrastructure exclusivity are also addressed. It also provides that pipelines will have at least 33 per cent capacity more than what is required by the operator. The extra capacity will be available for use on common carrier basis by any third party on open access and non-discriminatory basis at transportation rates laid down by the regulator.

The Petroleum Secretary, Mr M.S. Srinivasan, said the policy and regulations would be subjected continuously to a review and the regulator may suo motu suggest amendment. As regards unbundling of operations, the policy states that any entity desirous of applying for building, operating or expanding common or contract carrier gas pipelines will have to give an undertaking that if it has business interests in related areas of gas marketing or city or local gas distribution network or has a related entity under the same management, joint venture, and so on, it will ensure an arm's length relationship between the two entities.

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