The Hindu : Business : Centre unveils policies on city gas, pipeline projects

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Thursday, Dec 21, 2006
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Centre unveils policies on city gas, pipeline projects

City gas distribution (CGD) projects will have marketing exclusivity City gas distribution projects will have marketing exclusivity

— PHOTO: SHANKER CHAKRAVARTY

TOWARDS PIPED GAS: Murli Deora (right), Minister of Petroleum and Natural Gas, with M. S. Srinivasan, Secretary of the ministry, at a press conference in New Delhi on Wednesday. — PHOTO: SHANKER CHAKRAVARTY

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NEW DELHI: The Union Government on Wednesday unveiled the much-awaited policy on setting up city gas distribution projects that allows companies to have monopoly for a certain period in selling natural gas to households and automobiles.

"City gas distribution (CGD) projects will have marketing exclusivity. A company or consortia granted CGD licence for a particular city will have marketing exclusivity for a certain number of years,'' Petroleum Secretary M. S. Srinivasan told reporters here.

The period of exclusivity will depend on the size of the city and population.

It would also depend on the investment made by the companies in CGD projects and would be determined by the regulator, who is likely to be in place by January-end.

"It may vary between three and five years,'' he said.

Simultaneously, the Government announced the pipeline policy that provides for operators to build a minimum of 33 per cent extra capacity for leasing to third parties on common carrier principle basis.

The policy aimed at facilitating open access for all players to the pipeline network on a non-discriminatory basis and promoting competition among entities. This would avoid abuse of the dominant position by any entity, Petroleum Minister Murli Deora said.

"The main thrust of the policy is to secure consumer interest, both in terms of gas availability and reasonable tariff,'' he said. The Petroleum and Natural Gas Regulatory Board, which will be in place within one month, would authorise laying of pipelines and setting up of CGD networks, Mr. Srinivasan said.

Mr. Srinivasan said right of user (RoU) acquisition for any transmission pipeline/city or local gas distribution project would only be considered by the Centre after the regulatory board had granted authorisation. "Any entity desirous of applying to building, operating or expanding common or contract carrier gas pipelines will have to unbundle its transportation and marketing business,'' he said.

In the long run and with the maturing of gas markets, it is envisaged that authorised entities will have transportation of natural gas as their sole business activity and would not have any business interests in the gas marketing or city or local gas distribution networks.

Officials said Reliance Industries along with the Planning Commission had demanded that CGD projects should be open to all, but state-run oil firms and global energy majors British Gas (BG) and British Petroleum (BP) as also Indian public sector companies IOC, BHEL and GAIL had demanded exclusivity.

"Majority of countries the world over give exclusivity to CGD projects,'' Mr. Srinivasan said. Reliance industries was to use the vast natural gas reserves found in its D6 block in the Krishna Godavari basin for CGD networks across major cities, majority of which already have or would shortly have a city gas retailer.

There was also a demand to declare existing CGD networks, including pipelines in Delhi and Mumbai, as common carriers so as to allow new entrants access to them.

The Anil Ambani group also had applied for licences for Delhi and Mumbai, the cities which already boast a well-established CGD network.

Indraprastha Gas Ltd., a joint venture of GAIL and BPCL, operates in Delhi, while Mahanagar Gas, a joint venture of BG and GAIL, runs a network in Mumbai. — PTI

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