PNGRB forms high-level panel to tackle issues of competition, level playing field in CGD sector

The Petroleum and Natural Gas Regulatory Board (PNGRB) has created a high-level committee, chaired by former SEBI chairman Ajay Tyagi, to promote competition and level playing field in gas transmission and distribution businesses.

The regulator aims to infuse competition and create a level playing field for the city gas distribution companies, particularly with respect to marketing and infrastructure exclusivity issues. The panel has to give its report by December 10, 2024.

“Despite the clear regulatory mandate, PNGRB is facing significant hurdles to declare the authorised entity’s respective authorised geographical area (GA) as common carrier or contract carrier upon expiration of given exclusivity,” PNGRB said.

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The declaration of GAs as common carrier or contract carrier is essential for ushering in fair competition and efficiency in the city gas distribution sector, which may benefit the end consumer as well as authorised entity, it added.

“This may also benefit authorised entities because any entity other than authorised entity that transports natural gas through the authorised city gas distribution network will pay tariff to the authorised entity,” the regulator emphasised.

The primary objective of the committee is to analyse global practices concerning the separation of transportation and marketing activities including ownership of the pipeline in the natural gas sector and assess the current situation in India.

They will also recommend suitable measures to ensure effective implementation of separation of transportation and marketing activities in the natural gas sector including ownership of the pipeline, in compliance with international standards and best practices, PNGRB said.

“It is the Board’s intention that the above statutory mandates are implemented in a manner that balances the interests of the entities with the larger consumer interest. The Committee will also examine the existing regulatory framework, assess the impact of exclusivity and recommend a way forward,” it added.

The panel’s terms of reference include conducting a comprehensive review of practices followed by developed countries for separation of transportation and marketing activities in the natural gas sector including ownership of the pipeline.

Assess the current status of separation of transportation and marketing activities including ownership of the pipeline in the Indian natural gas sector, including legal, regulatory, and market conditions. Analyse the impact of separation of transportation and marketing activities in the natural gas sector including ownership of the pipeline on market competition, efficiency, and consumer welfare in these countries, it added.

The eight member panel includes former Engineers India CMD A K Purwaha and former President and MD of BG India, Shaleen Sharma.

The panel will also formulate recommendations for PNGRB, including possible model for separation of transportation and marketing activities in the natural gas sector including ownership of the pipeline, implementation strategies, and measures to address identified challenges.

It will provide actionable recommendations for revising the exclusivity framework in the CGD sector. Suggest measures to address legal challenges and ensure a fair and competitive market.

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