Our Bureau

New Delhi, July 14

Gas retailing is likely to gather pace.

The Government is set to strengthen the powers of the Petroleum and Natural Gas Regulatory Board (PNGRB) by allowing it to grant licences to companies for taking up city gas projects — piped natural gas (PNG) and compressed natural gas (CNG).

“After much deliberation, the Government is now going to notify Section 16 of the PNGRB Act, 2006, which will enable the Board to function in its full capacity,” the Petroleum Secretary, Mr S. Sundareshan said.

An official source told Business Line, “Till now the Board was only following the process of selecting the cities, calling for the bids, comparing the bids, selecting the winner and recommending to the Government. The Board did not have the powers to authorise the winners.”

Thus, with the notification of Section 16 all uncertainties pertaining to powers of the Board to either conduct the bidding or offer licences to successful bidders for taking up city gas projects in the cities will be put to rest. The Board also gets the authority to invite bids and issue licences for oil product pipelines as well.

The Delhi High Court had restrained the Board from issuing any licence for such projects till the Government clarified on the position. Certain companies that were either bidding or implementing city gas projects had questioned PNGRB's rulings or authority. Ambiguity in the Board's powers had led to them to approach various courts.

After deliberations with the Law Ministry, the Petroleum Ministry has decided to notify the Section 16 of the PNGRB Act. Section 16 gives explicit powers to the regulator to issue authorisations for city gas operations. Once the notification is issued the regulator will then inform the court concerned about the development.

The Government plans to expand the piped cooking gas network to more than 200 cities. Currently, piped cooking is available in 10 cities. It will help Government cut down on subsidies it currently pays for domestic LPG cylinders. Moreover, expansion of city gas network will help oil marketing companies divert domestic cylinders to rural areas.

(This article was published in the Business Line print edition dated July 15, 2010)
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