Companies in the city gas distribution (CGD) business wishing to enter the fast-growing compressed natural gas (CNG) market of Delhi might have to wait longer.
The stipulated marketing exclusivity of Delhi’s monopoly CNG player, Indraprastha Gas Ltd (IGL), ends on December 31. However, the company has demanded that the three-year exclusivity period be counted from the date when Section 16 of the Petroleum and Natural Gas Regulatory Board (PNGRB) Act was notified, on July 15, 2010, and not from the date when the company got authorisation, in January 2009.
Indraprastha Gas has written to the petroleum and natural gas ministry and the PNGRBin this regard. “Since the Board had no powers before July 15, 2010, they have no powers to determine and impose an exclusivity period. The period should start from July 15, 2010 and end on July 14, 2013,” M Ravindran, managing director of IGL, told Business Standard.
The ministry did not notify Section 16 when the rest of the PNGRB Act was notified on October 1, 2007. This section authorises the downstream oil regulator to lay, build, operate or expand a city or local natural gas distribution network.
PNGRB regulations provide for a marketing exclusivity of three years for companies present in a city prior to the regulations and of five years for new ones. Though IGL was present in Delhi since 1998, it was formally granted authorisation for the city gas distribution business in Delhi and the National Capital Region on January 1, 2009. Therefore, according to current PNGRB regulations, the exclusivity period should end on December 31, 2011.
Companies in the city gas business are also entitled to a network exclusivity of 25 years, extendable by another 10 years if the operator meets all the terms and conditions.
While this 25-year period ends in 2033, according to the original PNGRB regulations, if the government and Board agree to the demand of IGL, it will end in July 2035.
The Bombay Stock Exchange-listed IGL is a joint venture between the Delhi government and Union government-owned Bharat Petroleum and GAIL India. The company was formed in 1998 to take over CGD operations in Delhi, which got a boost from a Supreme Court order asking all commercial transport in Delhi to move to this fuel.
