Companies

Petroleum regulator declares Great Eastern pipeline ‘illegal'

Pratim Ranjan Bose Kolkata | Updated on March 12, 2018 Published on March 20, 2011

The Petroleum and Natural Gas Regulatory Board (PNGRB) declared the 53-km-long gas pipeline of the AIM (LSE)-listed Great Eastern Energy Corporation Ltd (GEECL) in West Bengal as “unauthorised and illegal”. The pipeline was laid to transport coal-bed methane produced by GEECL's production asset in Asansol to the consumption centres in Durgapur.

In a 40-page order on March 18, the downstream regulator has held GEECL responsible for “blatant and deliberate act of defiance and violation of the provisions of the PNGRB Act”, and imposed a civil penalty of Rs 25 lakh. An additional penalty of Rs 1 lakh a day has been imposed from the date of commencement of laying and building of the pipeline or the date of the (PNGRB) decision conveyed to GEECL, whichever is later, till the day it (GEECL) stopped the illegal construction.

A Y.K. Modi group company, GEECL was India's first commercial producer of CBM in 2007 before the PNGRB Act was notified. The company has reportedly invested Rs 800-900 crore in developing the production asset and building the supply infrastructure, including the Rs 100-crore pipeline to Durgapur to carry up to 3 mmscmd (million standard cubic metre) of gas a day – a production level that it projects to achieve in the next six-seven years.

Currently, producing 0.16 mmscmd of CBM, the company caters to a number of customers and provides CNG in the region through a collaboration with the oil marketing companies.

When contacted the President and Chief Operating Officer of GEECL, Mr Prashant Modi, claimed that the company has not formally received the order passed by the regulator. “We will take appropriate legal recourse against the PNGRB order,” he said, adding that supplies through the pipeline would be impacted.

Prolonged tussle

The order is reportedly a fallout of the company's more than a year-long resistance to declare the pipeline a common or contract carrier and apply (to PNGRB) for due authorisation. A common carrier (pipeline) leaves a minimum of one-third space free to be used by other transporters and falls under regulatory regime.

GEECL, on the other hand, claimed that the pipeline was meant for dedicated supplies that did not fall under PNGRB's purview.

The company previously approached the Delhi High Court contesting a “show-cause” notice issued by the PNGRB in December 2010 asking GEECL to stop all incremental work on the pipeline.

According to the Friday order, the High Court while directing that “the contentions of the company are being left open” allowed PNGRB to continue with its proceedings. The order also felt that GEECL is “prima-facie in contempt for non-compliance” with the order issued by the Delhi High Court on January 4, 2011.

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Published on March 20, 2011
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