Date:01/08/2005 URL: http://www.thehindubusinessline.com/2005/08/01/stories/2005080101840500.htm

Back Natural gas sector may be treated separately under proposed panel

Richa Mishra

New Delhi , July 31

A Committee of Secretaries examining the Bill for the establishment of a Petroleum and Natural Gas Regulatory Board has suggested separate treatment for the natural gas sector and incorporation of an affiliate code of conduct governing entities in this the business.

This puts to rest speculation on whether the natural gas sector would be treated separately from other petroleum products under the proposed board.

The gas industry had expressed concern on the treatment being given to the sector in the earlier Bill. There were queries on whether the board should be empowered to regulate the prices of petroleum and natural gas, and whether the upstream sector should be included within its purview.

According to official sources, while the Directorate General of Hydrocarbons (DGH) would regulate the upstream issues, the Petroleum and Natural Gas Regulatory Board will regulate the downstream issues. However, the board will look into the price of natural gas in the context of provisions relating to profiteering and transportation charges for pipeline.

Meanwhile, the Committee of Secretaries has suggested that the DGH should be strengthened and given more independence and autonomy.

On the issue of gas pricing, it has been recommended that the DGH could look into it, as per the provisions of product sharing contracts, the sources said.

The Bill will also stipulate the definition of profiteering and compressed natural gas station, besides elaborating on the concept of contract carriers.

A contract carrier will mean transportation of petroleum and petroleum products and natural gas by more than one entity pursuant to firm contracts for at least one year. A pipeline access code to establish a framework for third party access of pipeline has also been suggested.

A Bill to set up the Petroleum and Natural Gas Regulatory Board was introduced in Parliament in 2002. The Bill was then referred to a Group of Ministers, which in turn referred it to a Committee of Secretaries. The Petroleum Ministry now proposes to introduce a Bill in the House after considering the recommendations of all concerned.

The scope of the Bill would be to regulate petroleum operations beyond the crude oil and natural gas production phase. It will cover refining, processing, storage, transportation, distribution, marketing and sale of petroleum and petroleum products, as well as natural gas, its transportation through pipelines, and the establishment and operation of LNG terminals. The board will also regulate the setting up of city or local gas distribution projects.

On the issues raised by the Ministry of Company Affairs regarding an overlap with the Competition Commission of India (CCI), the sources said the provisions of the Bill relating to the exclusion of the jurisdiction of the Monopolies and Restrictive Trade Practices Act and CCI would be deleted. Regarding the issues of overlap, the Company Affairs Ministry has been asked to address the interface of the CCI and sector regulators through the amendments in the Competition Act.

On whether there could be a common appellate tribunal for the electricity, petroleum and natural gas sectors, the official said a common appellate tribunal has been recommended. This could be done by expanding the bench strength and brining in experts, sources said.