The Hindu Business Line : Added weightage for cos offering maximum piped gas connections

New Delhi, Aug. 7 To ensure that the benefits of gas finds in the country is available to the masses, the Petroleum and Natural Gas Regulatory Board (P&NGRB) has said that the companies offering maximum connection of piped gas will get additional weightage while giving the licence.

Besides, though the base price of the gas rests with producers, the companies offering lowest transportation tariff will get added weightage.

The Board has laid out regulations for selecting entities laying city gas distribution (CGD) networks through a competitive bidding process. According to a statement issued by the Board, “while the wellhead price of gas is outside direct regulatory purview, the regulator is ensuring that the cost of transporting gas to the consumer premises is kept at the minimum.”

Earmarked quantity

Recognising the importance of gas as a municipal fuel, the Government has earmarked five mmscmd of gas exclusively for CGD networks and this quantity will go up as production picks up in KG Basin and new LNG contracts are signed

“Therefore, in the bid, lowness of network tariff will get 30 per cent weightage, lowness of compressed natural gas (CNG) compression charge 10 per cent. Similarly, the regulations envisage that the entity offering to connect maximum number of domestic households will get a weightage of 30 per cent,” the statement said.

This is to ensure that the entity does not cherry pick just the profitable consumer segments such as industrial and commercial establishments, it added. The size of the network itself in terms of inch-kilometre pipelines carries a 10 per cent weightage.

The different weightage have been designed to incentivise quick and comprehensive development of CGD networks.

Expected experience

“The bidding entity is expected to have experience in building and operating CGD networks either on its own or through a joint venture partner, or by hiring experienced personnel and is in a position to tie-up gas supplies when authorised by the Board.

Besides, performance guarantees and deadlines will ensure that the entity executes the project in accordance with pre-agreed milestones,” the statement said.

Authorisation for CGD is non-transferable during the exclusivity period.

“The successful entity will have exclusive right to build the network and market the gas for five years from the date of authorisation after which, exclusivity will be limited to infrastructure and marketing will be thrown open to competing suppliers,” the statement said.

Open access

However, an existing CGD entity, authorised by the Board, will be allowed a lower exclusivity period for three years after which its network should be thrown open to all suppliers on a non-discriminatory open access principle.

The tariff of existing CGD entities will be fixed by the regulator, considering reasonable rate of return on investments, it said.