Gas Distribution Cos Oppose Move to End Exclusive Rights

More than half-a-dozen state-run gas distribution compani es have strongly objected to es have strongly objected to the sector regulator’s proposal to end their exclusive rights to distribute gas in their respective cities and declare the existing infrastructure as a common carrier. Some rivals and gas consumers have though supported the move, which would help induce competition and slash cost for consumers.

Indraprastha Gas (IGL), Assam Gas Company, Maharashtra Natural Gas Ltd, Central UP Gas Ltd, Sabarmati Gas Ltd, Gujarat Gas Ltd, Sanwariya Gas Ltd and Bhagyanagar Gas Ltd have all opposed the proposal by the Petroleum and Natural Gas Regulatory Board (PNGRB), the downstream regulator. Most objections have come on the ground that a quick termination of exclusivity would be financially disastrous for the incumbents, while many have challenged the regulator’s authority to undertake such an exercise without first framing the relevant regulatory framework.

Interestingly, GAIL (India) Ltd, the country’s largest gas marketer that owns stakes in IGL, Mahanagar Gas Ltd, Bhagyanagar Gas, Central UP Gas and Maharashtra Natural Gas, has welcomed the regulator’s proposal to end exclusivity in cities specifically served by rival Gujarat Gas and Sabarmati Gas.

“Ending the exclusivity period and declaring the said city gas distribution network as a common contract carrier shall benefit industrial customers as they would be in a position to source natural gas at the most competitive price,“ GAIL said in its suggestions to the PNGRB.

GAIL has also suggested framing of relevant regulations for declaring an existing city gas distribution network as a common carrier before starting the process of terminating exclusivity.

Gujarat Gas, which offers services in Surat, Bharuch and Ankleshwar, demanded the PNGRB withdraw the proposal to terminate exclusivity. “The public notice (proposal) is not only ultra vires the PNGRB Act but also premature and arbitrary as the honourable board itself has not formulated any regulations that would provide certainty as to the tariff that would be received in respect of common carrieropen access scenario by the city gas distribution (CGD) entities.This will cause more uncertainty relating to future investment and adversely impact the revenue of the CGD entities,“ it said.

Gujarat Gas has also demanded an “equal treatment“ to all distributors.

Source: Economic Times; 17 Feb 2016



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