‘Pipelines are infrastructure too’

Richa Mishra First Encounter | Updated on January 30, 2018

DK Sarraf, Chairman, PNGRB Ramesh Sharma   -  Ramesh Sharma

As India moves towards a gas-based economy, the PNGRB chief lays out his cards

From being ‘regulated’ to being a ‘regulator’ himself is where DK Sarraf finds himself today after having spent three-and-a-half decades in the country’s oil and gas industry. As chairman and MD of ONGC Sarraf had a smooth run, and became chairman of the Petroleum & Natural Gas Regulatory Board (PNGRB) soon after demitting office at the country’s largest public sector entity.

Two months into his new job, what is the transition like? Sarraf responds, “Since I come from the other side of table I know the pains of one who is being regulated, and as a regulator, I would be taking care of those pains. So I will not inflict similar pains. This role is different, but ultimately everyone’s mission is same and that is making clean energy at affordable prices available to one and all in the country.”

Budget expectations

As a finance person — Sarraf is an associate member of the Institute of Cost Accountants of India and the Institute of Company Secretaries of India —what are his expectations from the Budget, especially as the Government wants the country to become a gas-based economy. The response is prompt. “Pipelines should be included in the infrastructure sector. This is because there is no difference between a road and a pipeline. If road is infrastructure, then pipeline is as much infrastructure. This is something we have been telling the Government,” Sarraf says, adding “I would not expect the Government to give more Viability Gap Fund for construction of more pipelines. This is because these projects should come on their own strength or through some innovative financing.”

Ask Sarraf whether he sees any government interference in his new role, and the response is ‘politically correct’: “The Government has two roles, the first is to govern the sector and the second is that of an owner of the public sector enterprise, so the ministry (petroleum & natural gas) has a much bigger vision than the head of a PSU. As far as the regulator is concerned, till now, certain powers of PNGRB as enumerated in the PNGRB Act have been notified and some are yet to be notified. Our role today is restricted to what has been notified. In that our role is to create gas trunk lines and city gas distribution infrastructure and making that available to customers at reasonable prices ensuring free competition without restrictive and unfair practices.”

“Like if a toll road is to be made, the regulator has to ensure that an efficient road is made. Second is to offer investors a package of reasonable risk and reward for committing long-term investment and most importantly the third is to ensure that the vehicle owner is charged a reasonable amount. The role of the regulator here is to balance the creation of infrastructure with the protection of the consumer. It is challenging because these two things are generally opposite to each other,” points out Sarraf.

No interference

Does he think that the Directorate General of Hydrocarbons or PNGRB can be defined as regulators since some powers are still with the ministry? Sarraf says: “There might be say 25 jobs, out of which PNGRB has been given say 10 jobs, so for those 10 we are the regulator, and for these there is no interference. One can say for the balance 15 jobs should also be with the regulator, that’s a different matter.”

How about the dispute over who decides the price? “We have not yet been given power to set the price. Bringing pricing into our domain is one of the points for discussion, the Government need to decide on this. So far as we at PNGRB are concerned, our focus is to prove our worth in the assigned roles, new roles would come on their own as we re-establish our credibility. However, getting the roles assigned to us under the statute constituting PNGRB is important for providing the complete solution. It’s important to do away with missing links — this is leading to avoidable litigations. While it is important it may not be of immediate priority for couple of months,” he says.

Are too many regulators in the the country? “The concern should not be the number of regulators, but if there are overlaps or gaps between the roles assigned. So there should be well-defined roles for the regulators,” is the answer.

But then, you have the Competition Commission of India (CCI) looking into the issue of cartelisation. “Our view has been, when there is a sector-specific regulator — such as oil and gas — then they would be in a better position to handle cartelisation as compared to CCI. CCI may have a different view and we need to sit together and decide on this. Regulators are mature enough to mutually decide their domain as per laws,” he adds.

With the Government focussed on this sector, what are the key challenges? “Today our immediate focus is to authorise city gas infrastructure in 100 more districts, and by end-2018 in all districts connected to gas pipelines. The second focus is to complete the grid for natural gas trunk lines. Third, to look into how to minimise the number of litigations the organisation is involved in. It is currently spoiling the investment climate and eating away scarce time of our resources,” Sarraf sums up.

Published on January 30, 2018

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