 "Norms for CNG stations liberalised to grow beyond cities")
Now, any entity can set up CNG station anywhere irrespective of whether it has City Gas Distribution (CGD) network or not.
Till now, CGD network is a pre-condition for setting up of CNG station which was limiting the opportunity to few government owned city gas distribution network.
Thus this decision virtually ends the monopoly of such state owned operators in the business of setting up of CNG stations in any place be it city or rural hinterland or highways.
The minister as per its clarification states that CNG station is not part of CGD network and does not separate authorization from PNGRB to start operation.
According to officials, setting up of CNG station need not require authorization from the regulator – Petroleum and Natural Gas Regulatory Board (PNGRB).
For giving authorisation to set up CNG stations, the PNGRB Act mandates ownership of CGD network as preconditions for authorisation to set up CNG stations. This not only restricted the opportunity to few state owned monopolies which have CGD network but also prevented many consumers in availing the facility.
The consumers across highways, rural areas where there is limited CGD network , CNG stations are difficult to come up following this necessity of the PNGRB Act.
Analysts explained that a typical CGD networks costs around Rs 250-300 crore to service volumes of a level of around1.5 MMSCMD. The buildup of volumes is quite slow and customer penetration of a reasonable level of 50 -60% is achieved only after 9-10 years.
On the other hand, if some company has already gas network running along national pipeline which is a rural area or highway but the area does not fall under CGD network, that entity can service the consumers of that areas by setting up CNG station.
The issue has been clarified by the oil ministry following a question of law posed by one of the interested parties as to whether setting up of CNG station requires CGD network as precondition as per PNGRB Act.
This is because CNG station as such does not need the requirement of CGD network except as per the requirement of the PNGRB Act. Accordingly the decision was taken by the oil ministry in consultation with the law ministry.
Officials explained that the objective of this clarification is to promote setting up of retail network of CNG stations across the country and not only within city network.