Charotar Gas refuses Board demand to incorporate

Vol 13, PW 4 (30 Jul 09) Midstream & Downstream

Gujarat-based cooperative gas retailer Charotar Gas is vigorously contesting a demand from the petroleum and gas regulator to incorporate under the Companies Act, 1956.

Failure to incorporate, warns the regulator, could force it to strip the country’s only gas distribution cooperative, with 1800 members, of its right to operate a gas distribution network. “If cooperatives can function in sectors as diverse as banking, dairy, manufacturing and farming,â€‌ asks Charotar Gas managing director AJ Parmar in an interview with this report, “then why not in the gas retail sectorâ€‌ Parmar’s anger comes in response to a demand from the Petroleum & Natural Gas Regulatory Board in June for Charotar Gas and Vadodara Municipal Corporation (VMC) to accelerate the conversion of their quasi-charitable organisations into bonafide limited liability companies so that they can be issued with formal Board authorisation to operate.

“We have started the authorisation process of CGD operators in Gujarat,â€‌ says the letter from the office of PNGRB chairman Labanyendu Mansingh. “But as your organisation is not registered under the Companies Act, 1956 we cannot proceed with your authorisation application.

â€‌ Parmar is unimpressed. “Neither Charotar Gas nor the Vadodara Municipal Corporation can register under the Companies Act,â€‌ he adds, forcefully.

“If we do, our basic structure will change. It is not possible for us to register as limited liability companies.

â€‌ Parmar argues that the only way out of this impasse is for the Board to formulate a new set of rules for players like Charotar and VMC within the framework of the Petroleum & Natural Gas Regulatory Board Act, 2006. But until this happens, the minimum eligibility criteria laid down in the Act leaves no room for doubt.

Under the Regulations for Authorising Entities for the Development of Natural Gas Pipelines, it clearly states, “the applicant is a body corporate or else undertakes to become a company registered under the Companies Act, 1956.â€‌ Contacted by PETROWATCH, a source responds: “The Board chairman (Mansingh) is personally looking into these two cases and will decide a course of action.


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