Gas regulator and oil ministry on legal collision course

Vol 12, PW 6 (07 Aug 08) People & Policy

Away from the excitement of India’s burgeoning gas sector, the Board might soon find itself fighting a prolonged legal battle with the oil ministry over control of the country’s state-sponsored gas retailers, such as Indraprastha Gas and Mahanagar Gas.

At issue is whether the likes of IGL and MGL need Board approval to work because they were set up before the Petroleum and Natural Gas Regulatory Board Act, 2006 came into force. The ministry argues, â€کno’, they don’t need Board approval; the regulator argues â€کyes’, they do need Board approval.

Simple common sense dictates the regulator is right; that all gas companies, private sector and state-sponsored, should be answerable to one single authority, if only to avoid confusion. How can one set of gas companies be answerable to one agency, while another (private sector) answer to another agency Unless a clear demarcation of roles exists, mayhem and chaos is inevitable.

But common sense is a rare commodity in this dispute. Take time to read Section 42 (2) of the Act dealing with the â€کPower of Central Government to issue directions’ and it becomes strikingly clear that when MPs passed the Act they gave oil ministry bureaucrats carte blanche to block the regulator on almost anything, even the food it serves in its canteen! “Central government may,â€‌ reads sub-clause 2 of Section 42 (2), “issue policy directives to the Board in writing and such policy directives shall be binding on the Board.

â€‌ If that isn’t clear enough, perhaps the following is clearer: “The decision of the Central Government, whether a question is one of policy or not, shall be final,â€‌ reads sub-clause 3 of Section 42 (2). Board officials are rightly worried at this sweeping statement.

Is it right that IGL and MGL can operate at will, they argue, without regulatory supervision in 10 major cities, including Mumbai and Delhi What happens when they start rolling out networks in more cities and states Will these also be outside regulatory control