Competition Commission may regulate oil firms

The government will bring oil and gas companies under the jurisdiction of Competition Commission, after the setting up of a Petroleum and Natural Gas Regulatory (PNGR) Board for the downstream sector.

The Centre also plans to do away with the existing provisions in the PNGR Bill. The Bill excludes the jurisdiction of the Monopolies & Restrictive Trade Practices Commission, which is to be wound up once the Competition Commission is set up.

In the final Bill, prepared for consideration of a group of ministers headed by Defence Minister Pranab Mukherjee, the petroleum ministry has also proposed to dilute provisions relating to government taking over and restricting activities of companies. As per the revised Bill, companies can undertake activities only during wars and natural calamities.

The Bill was likely to be tabled in the Winter Session of Parliament, said officials. The note with the final draft mentioned that the department of company affairs would address the issue of interface of CCI and sector regulators through amendments to the Competition Act currently under consideration.

The modified Bill also provided that broad parameters, laid down by the Competition Act to determine transportation tariff, would be governed by the Centre to safeguard consumers and encourage competition.

The government was mulling over a similar provision for the electricity sector in which the Electricity Act 2003 provided for the methodology for the computation of transportation charges.

To prevent natural gas pipelines to become natural monopolies, the Bill will also include an affiliate code of conduct for companies engaged in marketing and laying of gas pipelines. Details of the code will be in the form of regulations to be issued by the board to ensure that affiliates do not get preferential treatment or competitive advantage in gas transportation services.

The Bill will also define profiteering and local distribution company. Modifying the earlier version prepared under the NDA rule, the new Bill will include the term 'contract carrier', wherever common carrier is mentioned.

Contract carrier, unlike common carrier principle, means pipelines carrying petroleum or gas for more than one entity under contract for at least one year.