British Gas wants bidding process for CGD licences

Vol 9, PW 26 (20 Apr 06) People & Policy

British Gas has stepped into the debate about the award of city gas distribution licences.

In comments to this report on the just-approved Petroleum and Natural Gas Regulatory Board Bill, BG says it favours the introduction of an open bidding process for CGD licences. BG said the Bill in its present form proposes access to the network but no clear process for the award of licences.

It adds that a competitive bidding process for the development and operation of local gas distribution networks is an absolute necessity and that investors must be given sufficient time to recoup costs in line with international best practice. Like others, BG is hoping the ministry will listen to its views when it draws up a gas transmission pipeline policy and new guidelines for CGD networks.

BG adds that companies who obtain CGD licences but do not lay networks within a specified period of time should be penalised and fined. Under the Bill, the government plans to appoint a regulator - with no links to the private sector - from a list of names drawn up by a selection committee, making only former bureaucrats eligible.

The regulator should be independent of government, says BG. Petroleum products and natural gas are at different stages of development and should be treated differently.

BG says the regulators role should be to administer a just environment for both the public and private sector, and drive investment that encourages competition. Another critical BG demand is for Open Access to existing (GAIL) transmission pipelines.

This will facilitate market access and allow a return on investment. BGs justification for Open Access is that, Many gas sources will be coming to market from the east coast.

It will be uneconomical for each of them to lay pipelines. BG also wants a affiliate code of conduct in the pipeline policy.

This is very much about not having any preferential treatment for affiliate companies of a pipeline operator.