BG calls for speedy introduction of new gas law

Vol 8, PW 11 (25 Aug 04) People & Policy

British Gas has renewed calls for the speedy introduction of regulation to oversee the countrys gas sector.

BG country head Nigel Shaw told a seminar in Delhi on 19th August that the gas industry in India is characterised by ad hoc decision-making where rules are issued sporadically with no clear vision. We need the (parliamentary) Bill to get the regulator in place, said Shaw.

And we need the regulator to get the infrastructure in place. Shaw discouraged plans to appoint civil servants as regulators.

In my experience the best industry regulators are those with a business background, he said. The worst regulators are from the civil service.

Shaw was equally critical of government plans to force gas transmission pipelines to have 25% excess capacity for 3rd party access. This is a big mistake and needs serious thought, said Shaw.

It will lead to unnecessary stranded costs. Shaw called for the immediate introduction of non-discriminatory 3rd party access.

He stressed that transparency in transmission tariffs is crucial to promote consumer confidence and that the present system operated by GAIL is ad hoc and non-transparent. Shaw used the analogy of train passengers who pay the same price for a train ticket to back his argument for published tariffs.

Determination of the tariff structure is crucial, said Shaw. It will influence the construction of power plants and fertiliser plants.

Shaws biggest criticism was reserved for the governments award of city gas distribution licences to GAIL for 22 cities in India. He contrasted the non-transparent manner in which these were awarded to the open and transparent procedure in Gujarat.

A system where the government hands out LDZ (Local Distribution Zone) areas to GAIL does not inspire confidence, said Shaw. Unless this changes we wont see the vigorous development of the gas industry in India.