Charotar rejects PNGRB demand for guarantee

Vol 16, PW 1 (26 Jul 12) Midstream & Downstream

Charotar Gas - India’s only gas co-operative - is so idealistic it thinks it can dream away the gas regulator’s office.

Beleaguered Board officials felt generous by letting Charotar bend the rules and operate a rural gas distribution network in central Gujarat’s Anand district, despite not registering under the Companies Act, 1956. But when Charotar received a letter from Board secretary Ratan Watal on June 24, demanding Rs2cr ($364,000) performance bank guarantee, it balked.

“Why should we deposit a bank guarantee with the PNGRB” questions Charotar. “What will they give us We don’t need their authorisation!” When reminded that PNGRB authorisation guarantees gas marketing exclusivity in a geographical area, our source replies: “Charotar doesn’t want exclusivity.

I have no objection if other CGD players coming to Anand.” Some fear if the PNGRB relents and gives special preference to Charotar it will lead to a spate of demands from CGD players unwilling to obey the rules.

Charotar argues it has a social remit and supplies gas to households in neglected villages. Margins are tight and it worries it cannot meet ‘milestone’ targets for infrastructure and sales set by the PNGRB in return for authorisation.

And this could result in losing its bank guarantee. “We cannot afford that as we work on a margin of just 28 paise,” we hear.

“This is the lowest marketing margin in India. You can commit to CGD targets in cities but not villages.

How can we promise growth in our area There are no new factories or businesses.” PNGRB officials, who have lowered the bank guarantee amount from Rs3cr ($546,000), say Charotar must comply to ensure “accountability.