States argue that Delhi should mind its own business

Vol 9, PW 26 (20 Apr 06) People & Policy

Gas industry sources tell us the oil ministry is wasting its time confronting states that have issued NOCs to set up CGD networks.

The state governments have done nothing illegal, says a private CGD player. With the exception of Gujarat, none of them have passed laws to regulate the gas business.

All they have done is to say they have no objection to anyone setting up a CGD network. Others argue the entire process of issuing NOCs was done transparently and that Expressions of Interest (EOI) requests were sent to all potential players before the NOCs were issued.

Taking steps to ensure local development is well within the rights and powers of each state, adds a source. Each of the NOCs issued clearly says that all laws made by the government of India should be complied with.

Why is the oil ministry getting so upset According to one senior state government official, the oil ministrys stand reflects Delhis rising frustration with growing autonomy of Indias states. The government of India has an Electricity Act which says that all state electricity boards should be unbundled, he says.

But how many states have actually done this Tamil Nadu has bluntly told Delhi that its electricity board will not be unbundled. Will they dare take any action against Tamil Nadu he asks.

Nor can the government do anything against Punjab, which has announced free electricity to consumers. States that abided by the Electricity Act and unbundled their electricity boards are making losses and are looking foolish compared to states that havent.

Granting NOCs for CGD networks will become a similar spectacle, we are told. The whole thing has become a big power game between the centre and the states, adds our source.

Can the centre prevent any state from inviting investors Issuing NOCs only amounts to inviting investors into the state. State government officials believe the oil ministrys wish to control the CGD licencing business reflects its nostalgia for the Licence Raj when officials in Delhi could make or break a business with the refusal of a permit.