Existing CGD operators question regulator's powers

Vol 11, PW 15 (15 Nov 07) People & Policy

Despite the imminent publication of new regulations, controversy continues to overshadow efforts by regulator Labanyendu Mansingh to stamp his authority on the City Gas Distribution business.

Take the latest directive to emerge from his office on October 30, ordering companies who are already in the City Gas Distribution business or planning to enter it “with or without authorisation from the central governmentâ€‌ to send in “all relevant detailsâ€‌ to the regulatory board within 30 days. Firms already in the business, but without central government authorisation, are warned against continuing work unless they are authorised by the board.

Anyone who breaches this directive faces a penalty of up to Rs25cr ($5m), warns Mansingh’s office. But some in the gas industry question the regulator’s powers over CGD businesses at all.

Why Because the government â€کnotification’ that formally enshrined the Petroleum and Natural Gas Regulatory Board Act, 2006 onto the statute books on October 1, specifically excludes Section 16 from the regulator’s powers. Section 16 deals with authorisation of pipelines and CGD networks and states and reads thus: “No entity shall (a) lay, build, operate or expand any pipeline as a common carrier or contract carrier (b) lay, build, operate or expand any city or local gas distribution network without obtaining authorisation under this Act.

â€‌ Exclusion of this clause from the regulator’s powers is sowing confusion among operators. “Since Section 16 has been excluded,â€‌ says a source running a CGD business, “he cannot ask for information on existing CGD businesses.

â€‌ Continues this source: “Section 16 is where the power lies in the Act. Bureaucrats (in the oil ministry) have denied the regulator this crucial power.

â€‌ Some say the ministry has turned the regulator into a “toothless tigerâ€‌ with its decision to remove Section 16 from his remit. Still, most will respond to his request for information, despite doubts about his powers.

“Everyone,â€‌ adds a source, “will send in the information to be on the safe side.â€‌