Canadian High Commission launches into gas debate

Vol 10, PW 14 (02 Nov 06) Midstream & Downstream

Canadas High Commission in India has taken the unusual step of launching headfirst into the gas debate by coming out firmly against marketing exclusivity for City Gas Distribution networks in India.

It is hoped that it (the pipeline policy) will provide scope and flexibility for full involvement by Indian and Canadian companies, notably by providing the freedom to set up a gas network as well as to undertake marketing, writes commercial counsellor and senior trade commissioner David McKinnon in a note to the oil ministry on 8th September. This flexibility should result in considerable competitive benefits for Indian consumers as well as attracting further foreign participation in the sector.

Canadian companies operating in India have told us that the present Act is structured to provide freedom of marketing by permitting the use of transmission pipeline and or city gas distribution networks by a third party, and it is hoped that any policy framework under the Act would retain these provisions without restrictions. Taken aback by the strong criticism of marketing exclusivity from all sides, the oil ministry has referred the matter to the law ministry.

The Ministry of Law may please opine whether the concept of marketing exclusivity as stated/developed (in the draft policy) is in order/logical and whether the alternative formulation under Clause 3.3 of the draft policy would serve the purpose besides being in conformity with the PNGRB Act, 2006, says an oil ministry note. In its defence the oil ministry says it has interpreted Sections 20 (4) and 61 (2) of the Act to mean that: The owner of the pipeline network shall have the exclusivity to use the network for itself, thereby implying marketing exclusivity.

Marketing exclusivity, says the oil ministry, will help companies recover investments but opponents cite Mumbai and Delhi where Mahanagar Gas and Indraprastha Gas have been sole players for over a decade but where market penetration is almost negligible.