Peace in CGD battle as ministry talks to regulator

Vol 12, PW 8 (04 Sep 08) People & Policy

Call it the calming impact of newly appointed petroleum secretary RS Pandey, or the healing effect of time, but tensions between the oil ministry and the gas regulator are cooling down - to general relief.

Over the past few months the oil ministry and the Petroleum & Natural Gas Regulatory Board have been engaged in a bitter war of words over the vexed question of who controls GAIL-promoted city gas distribution companies like Indraprastha Gas, Mahangar Gas, Bhagyanagar Gas and Green Gas, all of whom began operating before the Board was set up on October 1, 2007. Is it the oil ministry, or the Board At one point, the ministry was gearing up to invoke Section 42(2) of the Petroleum and Natural Gas Regulatory Board Act, 2006 to override the Board’s determination that it is now sole Lord and Master of all CGD operators in India, irrespective of when they began operating.

Happily for all concerned, tempers are calming. “We are talking to the Board to resolve the matter amicably,â€‌ confirms a ministry source.

“Our only wish is to protect the interests of the companies authorised by the ministry.â€‌ According to the ministry, its only aim in challenging the Board is to, “safeguard the huge investmentsâ€‌ already made by existing CGD operators, “and not to encourage squatters.

â€‌ Bhagyanagar Gas, for example, earlier had the whole of Andhra Pradesh, says the ministry, “but now our authorisation letter clearly mentions the cities in which it can operate.â€‌ Ditto for Maharashtra, where Maharashtra Natural Gas could operate in all of Maharashtra, except Mumbai, Navi Mumbai and Thane.

But from now, MNGL is confined to Pune. “We understand the Board’s dissatisfaction about CGD companies sitting on cities for 10 to 15 years doing nothing,â€‌ adds the ministry.

“But it is for the Board to set tough guidelines.â€‌ Board sources tell us there is now little likelihood the ministry will invoke Section 42(2).

“The misunderstanding will be cleared up,â€‌ we hear.