Regulator prepares 5-point strategy for CGD networks

Vol 11, PW 10 (20 Sep 07) People & Policy

Any company that identifies a town or city in need of a City Gas Distribution retail network could soon be free to apply for permission to set one up.

This is clearly laid down in a five-point (draft) strategy paper for the CGD sector prepared by the office of the new gas and downstream regulator earlier this month. PETROWATCH learns the strategy paper lays out the possibility of a “biddingâ€‌ process for interested companies that want to set up CGD networks.

Eligibility criteria for such companies have not been laid out but one can reasonably assume it is directed at established industry players such as Mahanagar Gas, Indraprastha Gas, Gujarat Gas, Green Gas, Adani Energy and others. In the first instance the regulator plans to publish a list of towns and cities where a CGD network is required.

These towns or cities would be near existing gas transmission pipelines (such as the HBJ or the Dahej to Uran pipeline) or transmission pipelines under construction (such as Reliance’s Kakinada to Uran pipeline). Crucially, the regulator stresses it is happy to receive unsolicited bids for towns and cities not on its list.

Less encouraging is the regulator’s intention to appoint a state-owned consultancy (why not a more efficient private sector consultancy) to prepare bid documents based on the draft CGD regulations. This consultancy would receive and process bids before submitting them for approval to the full regulatory board headed by chairman Labanyendu Mansingh and members LK Singhvi, BS Negi and Sudha Mahalingam.

Also planned is a list of â€کtechnical standards and specifications’ for â€کproducts, processes and services’, which when rubber stamped by the regulator, will be binding on all applicants. An â€کinterim access code’ of tariffs (to be published in the Gazette) is also proposed, so that CGD distribution pipelines can fit seamlessly with transmission pipelines.