Gujarat-based Adani Group’s energy business will emerge as an unintended beneficiary of the government’s decision to fully empower the downstream oil regulator ? the Petroleum and Natural Gas Regulatory Board (PNGRB) ? as it legitimises some pipeline networks that did not earlier get formal approval from the Centre. Adani’s gas pipeline networks in Udaipur, Jaipur, Lucknow and Noida are likely to get deemed approval of the Centre, a person privy to the development told FE.
The Centre on Wednesday said it is notifying a section in the PNGRB Act that would empower the regulator to carry out its mandate of licensing city gas distribution pipelines. Notifying section 16 without amendments would mean that existing pipeline networks that do not have the Union government’s formal clearance, would get deemed approval. The section says that any entity laying natural gas distribution network ?before the appointed date shall be deemed to have such authorisation? under the Act. The idea behind this clause was to exempt the entities that had secured the government’s approval from again seeking a fresh clearance from the regulator once it becomes fully functional.
Though unintended, it also exempts existing entities that do not have Centre’s approval from taking PNGRB’s clearance requirement. The government had explored amending the Section 16 and as an alternative, to set up a new national gas highway development authority. But since both the efforts did not fructify, it chose to notify the Section 16.
?This gives deemed approval to Adani Gas pipelines in some states,? a person familiar with the development confirmed to FE.
Recently, petroleum secretary S Sundareshan had said since PNGRB has till now not been empowered, the government was the licensing authority. Using this power, the Centre, on June 30, authorised Indraprastha Gas (IGL) to retail CNG to vehicles and piped gas to households in Ghaziabad.
The source said although Adani Gas? pipelines will now get deemed approval, the company’s performance in operating them and in meeting the service obligations to customers would be monitored by PNGRB. Pipeline operators will be penalised if they default on its obligations. The same applies to Indraprastha Gas Ltd, which started operations with the central government’s permission before the Board was set up. The norms also say that if the pipeline operators do not meet their obligations, the Board can withdraw the license (or ask the government to withdraw the approval) and can en-cash the performance bond given by the operator equivalent to 1% of the project cost or Rs 25 crore.