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City gas distribution policy in final stages

`Firms should have long term commitments'

NEW DELHI: Petroleum Minister Murli Deora on Tuesday gave final touches to the policy for laying natural gas pipelines and setting up city gas distribution networks (CGD) with a view to protecting consumer interest and assuring investors adequate returns.

The Government is likely to allow companies to have monopoly in retailing natural gas to households and CNG to automobiles for a `limited period,' which would be decided on the basis of investment made, location and market growth.

Under the Natural Gas Pipeline and City or Local Natural Gas Distribution Networks policy, the exclusivity period for city gas distribution networks might vary between three and five years, official sources said.

When contacted, Mr. Deora said he had held another round of consultations with stakeholders, including the Planning Commission and private firms like Reliance Industries and RNRL on the policy.

Priority to customer

"We are in the process of finalising the policy that will give priority to consumer interest, assure investors of adequate return in investment and provide stable regulatory framework,'' he said.

The sources said the policy would want firms to commit long term investments based on reasonable return through network tariff, along with some incentive for earning profit from gas sales through a limited period of marketing exclusivity.

Exclusivity would be granted for transaction of volumes below a pre-determined threshold in a transparent manner, the sources said, adding that the downstream oil regulator would decide on the period of exclusivity based on investments made, location and market growth. The new policy was in line with the demand made by state-run firms like GAIL and Indian Oil Corporation and multinationals such as British Gas (BG). It, however, runs contrary to suggestions made by the Mukesh Ambani-run Reliance Industries and the Anil Dhirubhai Ambani Group.

There was also a demand to declare the existing CGD network, including pipelines in Delhi and Mumbai, as common carrier so as to allow new entrants access to retail gas. — PTI

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