Gas pipeline policy is law with publication in â€کGazette'

Vol 10, PW 19 (25 Jan 07) People & Policy

Its publication went unnoticed but the significance is huge: the oil ministry has at last announced the long-awaited gas pipeline and CGD policy.

Long the subject of discussion between the ministry and industry, the Policy for Development of Natural Gas Pipelines and City or Local Natural Gas Distribution Networks came into effect on 20th December 2006, the date it was published in the â€کGazette of India’, which records Indian government policy. Central to the new policy is the ministry’s surprise decision to ignore overwhelming industry opposition to a proposal that forces companies laying pipelines to add 33% additional capacity.

Under the new policy, the oil ministry has made it compulsory to build in 33% excess capacity in every new gas pipeline that (crucially) is not laid for a dedicated customer. Of all the companies that submitted comments to the government, only BP agreed with the view that 33% extra capacity was required.

But the ministry, although sympathetic to the majority opinion, relented when faced with finance ministry blackmail that threatened to withdraw promised tax breaks for new pipelines through the coveted but not yet announced â€کinfrastructure’ status. Specifically, the policy says: “Authorisation for gas pipeline shall be granted to any entity only if the design pipeline capacity is at least 33% more than the capacity requirements of the concerned entity plus the firmed up contracted capacity (termed as total capacity) and (provided that) this capacity is available for use on (a) common carrier basis by any third party on (an) open access and non-discriminatory basis at transportation rates laid down by the (Petroleum and Natural Gas Regulatory) Board.

â€‌ On the vexed question of whether to give City Gas Distribution operators exclusivity in networks and in marketing, the new policy has come down firmly in favour of Reliance, which argued for exclusivity in networks, but not in marketing. GAIL, British Gas, Indian Oil and even BP wanted exclusivity in network and marketing.