Stripping away PNGRB control of the CNG business

Vol 17, PW 17 (10 Apr 14) Midstream & Downstream

Desperate to see more CNG stations, the government will publish a set of fresh ‘draft’ guidelines next month (May) to kick-start this struggling sector.

“We want more CNG stations in cities and highways,” says an oil ministry source, “just like petrol pumps.” Drafted by a ‘task force’ of representatives from IndianOil, GAIL, Bharat Petroleum, retailers GAIL Gas and Indraprastha Gas, the ‘draft’ guidelines will offer fuel retailers the freedom to set up CNG sales points without permission from the Petroleum & Natural Gas Regulatory Board - including within existing city gas areas.

Also on the table is a proposal to reduce the ‘net worth’ requirement of any company that wants to set up a CNG station – a move welcomed by smaller players LMJ Energy, Jay Madhok, Saumya DSM and Siti Energy. Under current rules any company that wants to set up a chain of petrol pumps must have a minimum net worth of Rs2000cr.

Under the ‘draft’ proposals, this has been reduced to Rs250cr for CNG stations. If approved, GAIL will benefit most, argue rivals.

“GAIL has the largest gas pipeline network in the country,” we hear. “It can set up CNG stations immediately, wherever profitable; others won’t find it so easy.

” An oil ministry source counters: “If GAIL has an advantage with its pipeline network then downstream players (IndianOil, HPCL and BPCL) will benefit from their extensive network of petrol pumps already in place.”