The National Gas Highway Development Authority proposed to be set up by Ministry of Petroleum and Natural Gas to fast-track the laying of natural gas infrastructure across the country, specially in the under-developed areas, will have significant regulatory powers. It will not only identify the necessary pipelines, it will also set the transportation rate for trunk pipelines to ensure equitable rates for consumers.
Both these functions are now vested with the Petroleum and Natural Gas Regulatory Board (PNGRB). To facilitate the functioning of the authority “suitable modifications” to the PNGRB Act of 2006 “are being processed separately”, says the a draft Cabinet note on the gas highway authority. The ministry’s justification for the new authority is that the board has not authorised a single new trunk pipeline since it came into being two years ago. It also says the pipeline map of India is skewed, with just the western and northern regions having access to this cheaper, cleaner fuel.
On the critical issue of transportation rates, the ministry contends that the PNGRB’s system of dividing trunk pipelines into zones of 300 km each and fixing additional rate on each of the zones would “amount to successively higher tariff for consumption centres farther away from the production centres”. This is in sharp contrast to GAIL India’s rate for the HVJ pipeline which has a common postal one for its entire stretch.
Members of the five-member authority would be made up of senior government officials. There is no provision for any independent, outside experts, as with PNGRB, on the gas highway authority which is expected to be created by a resolution.
The draft note which was sent to the ministries of power among others, the department of fertilisers and the PNGRB for their comments, is now getting the final touches, according to official sources. The note has been approved by Petroleum Minister Murli Deora.
PNGRB, it is learned, has sent a stiff rejoinder to the MoPNG, pointing out that its hands were tied by the ministry on the question of trunk pipelines, and it appears that there will be a showdown on the issue. The ministry has not responded to questions from the Business Standard on the rationale for setting up a parallel authority.
The proposals put forward by the ministry reveal an ambitious plan to fund and administer the authority. It envisages the creation of a National Gas Highways Fund since the financing will primarily be through public funds or in the PPP (public-private partnership) mode. However, the exact financing structure for the pipeline is to be decided by the authority on a case-to-case basis. Funds may be garnered through a cess under the Oil Industry Act (this was suggested by MoPNG Secretary R S Pandey when he had floated the idea for a national gas grid in May this year), loans from multilateral agencies, equity participation by the executing agencies along with limited budgetary support from the government.
The draft proposal has also outlined a distribution mechanism to regulate the flow of gas since the country is “witnessing a rapid expansion of the natural gas sector with multiple producers, transporters and marketers” along with different categories of gas from APM (administered price mechanism) gas to that produced by national oil companies and private companies under the new exploration licensing policy.
What is planned is a National Centre for Natural Gas Grid Management, much on the lines of the load despatch centres that monitor electricity distribution, for what it calls optimum scheduling and despatch of natural gas. If necessary, regional grid manage.
