Gas regulator wants break-up of MRP from local distribution entities

Gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) told the Supreme Court that all city or local natural gas distribution entities (CGD), including Delhi-based Indraprastha Gas, should provide a detailed break-up of the MRP charged by them from consumers, including various cost components.

A bench headed by Justice Dipak Misra, while posting the matter for hearing, observed that prima facie PNGRB didn’t appear to have powers for regulating retail price or transmission tariff and thus cannot compel the government to pass any such notification to regulate prices and tariffs. Stating that IGL may not fall under common or contract carrier category, the apex court also sought to know the impact of the central government’s February 18 notification that directed all city or local natural gas distribution entities to ensure transparency in pricing, the break-up of CNG (transport) and also disclosure of PNG (domestic) price to consumers.

Senior counsel Arvind Dattar, appearing for PNGRB, said such disclosure of transportation tariff based on self-declaration by the entities is in the interests of fair trade.

According to PNGRB, CGD entities, which have been granted authorisation based on competitive bidding after the establishment of the Board, were already complying with the disclosure requirements. Such disclosure norms are equally applicable to entities like IGL, which were authorised by the central government prior to the establishment of PNGRB, and have been conferred with “deemed authorisation” status under section 16 of the PNGRB Act.

It further argued that while it does not have powers to fix the selling price, the statute provides for fixing of transmission tariffs.

However, IGL alleged that PNGRB was adopting indirect means to assume power for regulating prices and it cannot fix transportation cost for city gas carriers.

Meanwhile, the government also backed IGL stating that PNGRB is not empowered to determine retail prices.

PNGRB in April 2012 had directed gas utility company IGL to cut it’s network tariff to R38.58 per million British thermal unit against R104.05, down by around 63%. The regulator fixed CNG compression tariff at R2.75 a kg against R6.66/kg charged by IGL.

The Delhi-based gas utility had appealed against this order in the Delhi High Court, which in June last year held that the regulator had no jurisdiction to fix rates or regulate gas tariffs for entities like IGL who have their own distribution network. Aggrieved by this, the gas regulator had moved the apex court, which in August 2012 ordered that for the time being, it would be open to PNGRB to collect all relevant information to fix any component of network tariff or compression charge for an entity but such fixation shall not be notified without its permission.

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