Power of the new state gas regulator

Vol 4, PW 2 (01 Mar 00) Midstream & Downstream

One of the most significant elements of the new gas legislation will be a provision for the creation of a local gas regulator.

Until the bill is made public, officials are reluctant to speculate on exactly what powers he will have, but a few ground rules have already become clear. The first is that the regulator will NOT have the power to set the tariff for transmission and distribution of gas.

This will be the responsibility of Gujarat State Petronet, the holding company set up to oversee construction of the gas grid. He will, however, have the power to amend the price set by Gujarat Petronet if he thinks it is too high, or for that matter too low.

The regulator will NOT have power over inter-state transmission and distribution of gas, i.e.

by pipeleine to Rajasthan or Maharashtra. This will be the responsibility of a national gas regulator, which Delhi has for long promised to set up but as of yet shows no sign of doing.

Gujarati officials dismiss suggestions of a potential conflict of interest between the state and a future national gas regulator by pointing to the power sector where state regulators work in tandem with their national counterpart. Officials stress equally that the 'Gas Act' will set the regulatory framework for the transmission and distribution of gas in Gujarat and will NOT in any way impinge on the supply of gas at the four ports destined to receive LNG.

The act (expected to run into approximately 100 pages) will also contain a clear outline of the parameters within which franchises will be issued for the transmission of gas to specific areas.