The government unveiled a policy for natural gas pipeline and city gas distribution (CGD) that allows exclusivity in selling natural gas for households and automobiles
NEW DELHI: After months of discussions within the government and the industry, the government unveiled a policy for natural gas pipeline and city gas distribution (CGD) that allows exclusivity in selling natural gas for households and automobiles, though it is silent on the nature of exclusivity.
Aspiring entrants into the CGD business, including both Reliance groups led by Mukesh Ambani and Anil Ambani, had made representations against the exclusivity clause, though the existing players like BG group and GAIL were in favour of exclusivity in order to earn returns on their investment.
“City Gas Distribution (CGD) projects will have marketing exclusivity. A company or consortia granted CGD license for a particular city will have marketing exclusivity for a certain number of years,” petroleum secretary M S Srinivasan told reporters.
The policy lays down that the Petroleum and Natural Gas Regulatory Board, that is likely to be in place by January, will decide on the period of exclusivity to lay, build, operate and expand a city or local gas distribution network.
“The board may through regulations decide on the principles for determining the number of years for which the city or local natural gas distribution network shall be excluded from the purview of a common carrier,” said the policy statement.
The period of exclusivity will depend on the area, population and density of a city.
It would also depend on investment made by the companies in CGD projects and would be determined by the regulatory board.
In case of pipelines, the operators will be required to build in a minimum of 33% extra capacity for leasing to third parties on common carrier principle basis.
There will be open access for all players to the pipeline network on a non-discriminatory basis and to promote competition among entities. This would avoid abuse of the dominant position by any entity, Petroleum Minister Murli Deora said at the conference.
Deora also shared the details of understanding reached with China and Korea during his recent visit to Beijing for an energy meet.
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