Oil companies get a free hand in setting up CNG stations

New Delhi: In a significant development, the Petroleum Ministry has held that the oil regulator’s approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities.

The Ministry recently issued an order saying “no authorisation from Petroleum and Natural Gas Regulatory Board (PNGRB) is required for setting up of a CNG station.”

PNGRB has been issuing licences since 2009 to entities for city gas distribution (CGD) networks, essentially for retailing compressed natural gas (CNG) to automobiles and piped cooking gas (piped natural gas or PNG) to households.

The Oil Ministry has, however, held that while PNGRB can issue authorisation for CGD, companies are free to set up CNG stations without its prior approval.

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“CNG station is not covered in the definition of ‘city or local natural gas distribution network’ provided in the PNGRB Act, 2006. No authorisation from PNGRB is required for setting up of a CNG station,” it said in a letter to GAIL India Ltd Chairman and Managing Director.

Officials said this essentially means that PNGRB can issue authorisation or licence for CGD which entails laying of local gas pipeline network. But any entity can set up a CNG station and hire pipeline network of PNGRB-authorised CGD entity for taking gas to the retail pump.

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The Ministry’s letter was in response to GAIL writing to the Oil Secretary asking if in terms of PNGRB Act, 2006, CNG stations are integral part of CGD network or not.

“The issue was examined in the Ministry in consultation with the Department of Legal Affairs, Ministry of Law & Justice,” the Ministry said while passing the directive on CNG stations not coming under purview of PNGRB.

The directive comes as a blow to PNGRB which had in October invited bids for issuing licenses for retailing CNG and piped cooking gas in 14 cities including Bengaluru, Pune and Amritsar.

Bids are due on February 11, 2014.

The officials said PNGRB can issue authorisation for these cities to entities for laying of the pipeline network in the city.

This is essentially the fifth round of CGD bidding, with the previous fourth round that was announced in September 2010, scrapped in November 2011.

PNGRB had invited bids in 2009 for 13 cities in the first two rounds. It hasn’t been able to award most of the cities offered in the third round because of litigations.

GAIL Gas Ltd, a subsidiary of state-owned GAIL India Ltd, had walked away with four of the six cities offered in first round of CGD bidding in 2009.

It won Sonepat in Haryana, Dewas in Madhya Pradesh, Meerut in Uttar Pradesh and Kota in Rajasthan while Bhagyanagar Gas Ltd got Kakinada in Andhra Pradesh and DSM Infratech Mathura in Uttar Pradesh.

In round two, the Indian Oil Corp-Adani Group combine walked away with Allahabad and Chandigarh while Reliance Gas got Rajahmundry, Shahdol and Yanam in Andhra Pradesh. Jhansi went to Central UP Gas Ltd.

The third round of bidding was opened in July 2010 and concluded in February 2011 (after extension), but final awards of most cities are yet to be made because of certain litigation involving PNGRB and a few other parties.

City-based Jay Madhok Energy won rights to Jalandhar city, according to PNGRB.

PTI