Draft gas policy moots national advisory body

The government's draft natural gas pipeline policy has proposed that permission for laying gas pipelines would be granted only to entities with pipeline capacity of at least 33 per cent more than their total capacity requirements.

The policy, which also moots the setting up of a National Gas Advisory Body (NGAB), has said that this extra capacity would be accessible to a third party and would be allocated on a first-come-first-serve basis.

The NGAB will be headed by the secretary, ministry of petroleum and natural gas, who will be the board's chairman. It will have representatives from the major oil and gas consuming ministries and departments, state governments, the oil and gas industry, consumer organisations and industrial chambers, associations and expert bodies.

The policy has also proposed that the Petroleum and Natural Gas Regulatory Board will be responsible for the selection of entities for gas transmission pipelines or a city or local gas distribution network.

"The policy has also mooted that the entity proposing to lay, build, operate or expand a transmission pipeline will be required to furnish to the Petroleum and Natural Gas Regulatory Board an irrevocable bank guarantee of an amount equivalent to 2 per cent of the project cost or Rs 20 crore, whichever is lower," a government official told Business Standard.

This guarantee may be furnished for commissioning the project according to the approved time schedule and the outer time-limit specified by the board.

"A similar bank guarantee of 10 per cent or Rs 5 crore, whichever is lower, shall be required to be furnished for the city or local gas distribution network," the official added.

"With increased exploration efforts under the New Exploration Licensing Policy, large-scale discoveries of gas in the east coast, commissioning of LNG import terminals in the west coast, projected LNG terminals and the government's plans to import natural gas through transnational pipelines, there is an imminent need for this policy," the official said.