Tripathi asks GIG to draft CGD model for PRB Bill

Vol 8, PW 24 (09 Mar 05) Midstream & Downstream

GAILs monopoly of the City Gas Distribution business outside Gujarat is likely to come under increasing scrutiny, thanks to some sustained lobbying by the recently set up Gas Industry Group.

On 24th February oil secretary Sushil Tripathi promised a visiting team of GIG founders British Gas, Shell, Reliance and Exxon that he would re-examine clauses in the proposed Petroleum Regulatory Board Bill that make the CGD business in India the exclusive domain of GAIL. The secretary asked us to submit a model on which the CGD business could be based, reveals a GIG member.

During the meeting, the GIG founders asked Tripathi to evolve a transparent procedure for the award of CGD licences in India to counter a 2003 directive authorising GAIL to set up CGD and CNG networks in 22 cities across India with other state-owned oil companies. GIG fiercely contests this directive, describing it as non-transparent.

In its place GIG wants a future regulator to issue CGD licences with well defined bidding terms and conditions based on the Gujarat model where the state government issued licences under the (now defunct) Gujarat Gas Act. The future of India depends on city gas distribution, BG India chief Nigel Shaw told journalists on 23rd February.

Today the government has a highly unclear, opaque and unfair procedure by which only PSUs are allowed to set up CGD networks. GIG also asked Tripathi to introduce a time-bound exclusivity clause for local gas distribution in the new law.

This will ensure fierce competition between various players in gas distribution, it said. It should be a phased model in which a company can recover its investments from the network in a fixed period.

GIG also asked Tripathi to remove a clause that permits the appropriation of privately-owned CGD assets by GAIL without prior notice.