IGL on track to humiliate PNGRB again

Vol 16, PW 26 (25 Jul 13) Midstream & Downstream

Indraprastha Gas (IGL) has won crucial oil ministry backing in its fight with the gas regulator over who has the ultimate authority to fix retail gas prices.

Nikunj Kumar Srivastava, oil ministry director gas pricing, submitted an affidavit to the Supreme Court on July 18 confirming the PNGRB has no authority to fix the maximum price that companies sell gas to customers. Srivastava was responding to a petition filed by the Board in July 2012 challenging a Delhi High Court order on June 1, 2012 which - in a resounding victory for IGL - quashed a Board directive on April 8, 2012 directing the Delhi-based city gas retailer to lower its gas price.

The Board's directive recommended a 63% reduction in network tariff and compression charges backdated from April 1, 2008. If the Board had won, IGL would have been forced to refund up to Rs1200cr ($201m) to customers.

But now it looks like IGL will win again, with ministry help. "The PNGRB Act, 2006 does not provide for fixing the gas price on sales to consumers,” affirms the oil ministry affidavit, in uncompromising terms.

“The maximum retail price is to be fixed by the entity (company).” The Board’s role is only to monitor the gas price and take corrective measures to prevent restrictive trade practices,” adds the ministry.

“The government affidavit definitely weakens the Board’s case,” says a former Board member. “The PNGRB is struggling to prove to the Supreme Court that it is not trying to fix a maximum retail price for gas but only the network tariff component of the overall gas price.