Confusion on City Gas Distribution following ruling

Vol 8, PW 1 (07 Apr 04) People & Policy

Gujarats City Gas Distribution policy is in disarray following the Supreme Court ruling.

Since April 2003, Gujarat has awarded seven No Objection Certificates to three companies to supply natural gas through an intricate network of pipelines. Following the Supreme Court ruling, these NOCs appear little more than worthless bits of paper.

Its the law of the jungle from now on, a source from Gujarat Adani tells PETROWATCH. With no legislation in sight, anybody can construct a pipeline anywhere in the state.

Gujarat Adani is the only CGD company actively pursuing distribution projects in two cities: Ahmedabad and Vadodra, with planned investments of Rs400cr ($88m). Law or no law, we are going ahead with our plans, he adds.

Gujarat Petronet echoes this sentiment. Ultimately, the government has to accept the existing networks and pipeline capacities created by us and any other company in the gas business.

Adds Bharat Petroleum, winner of the Gandhinagar, Mehsana and Sabarkantha licences. Gujarat has assured us that it will find a solution by negotiating with the oil ministry over the existing NOCs, says a BPCL official.

GSPC tells us that a mechanism will be evolved to cover the existing CGD projects in Gujarat. Ditto is the response from GAIL.

I am sure the oil ministry will not revoke the NOCs already issued by the state government, reveals a source. We are doing a market survey in our circles.

Once this is complete we intend to start work. GAIL has been awarded Rajkot and Bhavnagar.

According to a senior oil ministry source, CGD projects will be covered under the much-delayed Petroleum Regulatory Board Bill, 2002 when it becomes law. The ministry has already accepted a recommendation from the Standing Committee on Petroleum and Chemicals that CGD is included in the definition of common carrier in the proposed act.

He adds: I dont see why Gujarats gas distribution companies should panic. Instead of the state government they will now have to seek permission from the central government.

But the terms and conditions are likely to remain the same. Our ministry source predicts that it will take six to eight months for a regulatory mechanism to come into force.

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