Sarraf sympathetic to Covid-19 delay requests

Vol 23, PW 11 (09 Apr 20) People & Policy

PNGRB chairman DK Sarraf has promised leniency to companies declaring Force Majeure at CGD-IX and X areas because of the 21-day national lockdown until April 14.

Sarraf, who retires in December (2020), confirms to this report that the regulator will look favourably on declarations of Force Majeure after Narendra Modi announced the nationwide lockdown on March 24 to combat the Coronavirus pandemic. "I am unaware of anyone sending it (Force Majeure declaration) in," said Sarraf, on April 1.

"Irrespective, we'll see what we can do; we are aware nobody can work and will keep this in mind when things normalise." An industry source tells us Force Majeure is defined and set out in Regulations 2 and 14 of the Petroleum and Natural Gas Regulatory Board Act, 2006.

He believes gas retailers with CGD-IX and X areas will need to stop work for a minimum of twelve months. "State governments will continue restrictions depending upon how Coronavirus is affecting them, even if the (national) government lifts the lockdown on April 14," says a CGD company source.

"Companies will find it impossible to work for another three or four weeks or until end-May." From June onwards, monsoon rains set in until late September preventing CGD players from working on the ground.

Gas retailers will also struggle to buy vital equipment, including booster compressors, gas grade plastic granules, and pipe fittings, from China or Europe.

A source speculates that even if China ends its lockdown over the next month, nobody will travel there to buy equipment for another six months because of the health risk. “And we still don’t know how long it will take for Europe to overcome the pandemic,” he adds. Worse, Indian authorities are unlikely to let people resume overseas air travel for some time. Added together, say CGD company sources, it will take at least a year for normality to return. Held in 2018 and 2019, the PNGRB has awarded a total of 134 areas under CGD-IX and CGD-X. Winners must complete their targets for household gas connections and CNG stations within eight years. “But we have spent the first year getting clearance to begin work, buying land for city gate stations, getting gas connectivity and arranging bank financing,” says a source. “Now, with Coronavirus, another year is gone, leaving us to complete eight years of work in six years, which is impossible.” Some CGD companies admit they have only completed between 5% to 10% of work on the ground.

Sarraf sympathetic to Covid-19 delay requests

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