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PNGRB revising city gas licensing rules: Chairman Dinesh Sarraf

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Source: The Economic Times
Saturday, January 27, 2018

 NEW DELHI: The downstream regulator is reworking city gas licensing rules, readying to launch 100 new city gas distribution licences, and cut myriad litigations it's been caught in with gas companies, to rebuild itself into a more effective and credible watchdog that can help country achieve its target of raising the share of natural gas in the energy mix from 6% to 15% by 2030. 


"At an annual growth rate of 5.5%, energy consumption in India would double by 2030. So the gas consumption will have to rise five times by 2030 to meet the 15% target," Dinesh Sarraf, who has recently taken over as the chairman of Petroleum and Natural Gas Regulatory Board (PNGRB) after retiring as chairman of Oil and Natural Gas Corp last year, told ET in an interview. 

PNGRB has often been criticised in the past for less than optimal rules needed to support the development of the gas sector in the country. PNGRB was dysfunctional for more than a year for want of enough members on the board. With the appointment of Sarraf and other members to the board, the regulator seems to be back in action. 

In the next two weeks, PNGRB will announce the names of 100 more districts for which it intends to award licences, Sarraf said. The choice of districts will be such that more highways have gas coverage, making inter-city commute for CNG vehicles possible, he added. So far only 91city gas licences have been awarded in the country, including 14 delivered in the last one month. 

Before the auction for 100 new licences are launched by March, PNGRB plans to rework bidding norms, hoping to plug the loopholes in the existing rules often blamed for poor growth of city gas. 

As per the draft guidelines, open to stakeholder consultation, winner will be chosen on the basis of the number of consumers connection and CNG stations, and the length of gas pipeline bidders promise to achieve in a given time frame, Sarraf said.
 
Missing targets would invite penalty, forcing companies to meet their commitment, he added. The draft rules also require bidder to offer a fixed performance guarantee, ending the previous practice where the provider of higher guarantee always won, Sarraf said. 

Another problem area being tackled is the pipeline tariff after the exclusivity period, which was almost always quoted as one paisa by all bidders previously. Now there will be a minimum tariff, above which bidders can quote. 

"We are open to new suggestions and will try and include anything that can make the process better," Sarraf said. Sarraf is attacking another key problem area for PNGRB: multiple litigations. "We are talking to gas companies, asking them to settle things outside court," Sarraf said. 

"Once litigations reduce, our people will be free to do more productive work, instead of disproportionately spending time on court cases as they do today." 

In the last one month, PNGRB has awarded city gas distribution licenses for eight districts for which an auction was held last year. Indraprastha Gas and Essel Gas won one district each while the joint venture of Indian Oil and Adani won two areas, and HPCL-Oil India has won three districts. 

PNGRB, at the direction of the government, has also given GAIL licences for six more districts that will receive gas from the Jagdishpur-Haldia pipeline, currently under construction.


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