The Hindu : CII proposals on oil regulatory board

Online edition of India's National Newspaper
Sunday, Jun 16, 2002

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CII proposals on oil regulatory board

By Our Special Correspondent

NEW DELHI June 15. The Confederation of Indian Industry (CII) has suggested that the proposed Petroleum Regulatory Board Bill should contain separate regulatory guidelines for developing the natural gas and petroleum products sectors. It maintains that this is necessary since the two sectors are at different stages of development.

The CII has told the Government that while the petroleum products industry is more mature, the natural gas industry is still at a nascent stage of development.

Thus, CII feels differentiation within the two sectors, wherever necessary, should be included in the proposed regulatory framework.

According to the chamber, crucial differences also exist in developing markets for the two sectors.

As only limited gas transportation infrastructure is available in the country, the gas sector would need investment-encouraging measures to build and extend the existing infrastructure network. On the other hand, the petroleum products sector would require competition-enhancing measures to effectively regulate and infuse further private investment in the sector.

The CII has stressed that instead of determining tariffs, an important function of the proposed regulatory board should be to regulate transmission tariffs or resolve pricing disputes.

Urging the Government to confine its role to that of a regulator rather than a controller, it has also suggested that development of the overall regulatory framework should be carried out through consultation with industry, international experts and other interested groups concerned.

The proposed board, according to the CII, should have private sector representation along with the pool of expertise available from academia, professional institutes as well as industry associations.

Moreover, as the board would be required to regulate natural gas business, one member with adequate knowledge and expertise in the natural gas business should be included in the board.

In order to maintain the independence and autonomy of the proposed regulatory board, CII has stated that funding of the board should be made through independent sources such as through contribution and charging license fees from all the concerned entities.

This, it is stated, would ensure the independent functioning of the regulatory board as well as minimum involvement of the Government.

Noting that excessive intervention by the Government in the decision-making process would affect the independence of the board, the CII has suggested that the proposed framework should ensure that the Government's role is limited to formulating general policies and intervening only when the country's oil security is in question.

According to CII, the function of the regulatory board should be defined unambiguously and objectively to avoid any misuse of rights and the proposed framework should have provisions to address important issues of the industry.

The key objectives of the regulatory board would be to encourage investments into the petroleum sector and ensure a level-playing field in the industry, the CII has stated.

It feels that a single regulator for the entire country would be ideal with a clear demarcation of roles maintained between the Federal regulator and State entities if the two are to co-exist.

The framework should also contain provisions that non-discriminatory third-party access to transmission pipelines is ensured and that the envisaged common carrier pipeline network system should be enunciated in the Act, the CII has pointed out.

In addition, the act should ensure that no discrimination is made between the pipeline owner's supply business and other users of the pipeline.

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