The Hindu Business Line : Leeway for cos planning to enter gas distribution biz

Open pipeline
Over 100 applications have been received
Condition waiver to give players more time for
tying up sources
Bid to encourage fair and competitive market

Richa Mishra

New Delhi, Jan 26 Companies such as Anil Ambani-led Reliance Fuel Resources Ltd, which want to enter the gas transmission and distribution business but have no confirmed source of gas supply, may be able to foray into the segment.

The Petroleum and Natural Gas Regulatory Board is considering diluting the pre-eligibility criteria by stipulating that confirmed source of gas supply may not be a prerequisite for companies seeking to enter the business.

As part of the bid criteria, confirmation of gas source may not be prescribed in the beginning. This would, in effect, make it easier for new entrants to tap the sector and not restrict it to a handful of players, thereby averting a monopolistic market.

The Chairman of the regulatory board, Mr L. Mansingh, told Business Line that “on the basis of comments received on the draft regulation put out by the board, we are considering diluting the pre-eligibility criteria which proposed availability of gas supply as a pre-condition.” This would give players sufficient time to tieup with gas supply, while encouraging competition.

The objective of the board is to encourage fair and competitive gas market, he said.

The regulatory board has received over 100 applications from domestic and foreign companies interested in entering the city gas distribution segment for supply to domestic households and vehicles.

While companies such as Reliance Industries, Indian Oil Corporation and GAIL (India) have plans for a pan-Indian presence, companies such as British Gas, British Petroleum and the Adani group are said to be focusing on a few key markets. The Government’s target is to roll out city gas networks in about 200 cities over the next five years.

According to industry sources, “dropping the pre-condition of assured gas source would give enough time to players to confirm gas sources, as no one would want the pipeline to run dry. The regulations would be aimed at facilitating open access for all players on a non-discriminatory basis and promoting competition among entities.” The board plans to notify the regulations shortly.

In fact, the Anil Ambani-promoted company had approached the Ministry with a proposal to lay a pipeline through Kakinada (Andhra Pradesh) to Dadri, where its group company plans to set up a power project. It had also proposed to set up city gas distribution networks in the cities falling along the pipeline for supplying natural gas to industrial, commercial, domestic and automobile sectors. The company was asked by the Petroleum Ministry to first confirm the gas source.

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