Govt to SC: PNGRB not entitled to fix petroleum, gas prices

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jul 19 2013, 11:22am hrs
The Petroleum and Natural Gas Regulatory Board (PNGRB) has no power to fix the prices of notified petroleum and natural gas, but can only monitor their marketing and sales and prevent restrictive trade practices by taking corrective measures, the Centre has told the Supreme Court.

In its affidavit filed last week, the ministry of petroleum and natural gas has supported the stand of the marketing companies, including Delhi-based utility Indraprastha Gas (IGL), that PNGRB is not empowered to fix or regulate the maximum retail price (MRP) at which gas is to be sold by such entities. Even the board is not empowered to fix any component of network tariff or compression charges for any City Gas Distribution (CGD) entity, the argument which was upheld by the Delhi High Court last year.

Stating that various provisions of the PNGRB Act, 2006, read with the policy are unambiguous, the ministry said: Regulatory oversight over marketing and sale of notified petroleum products and natural gas would include enforcement of retail service obligations and marketing service obligations by the board. However, the Board is not empowered to fix the price at which the entities will market or sell notified petroleum and natural gas. The MRP is to be fixed by the entity. The board shall monitor prices and take coercive measure to prevent restrictive trade practices by the entities.

The governments response has come on a petition filed by the Board which had last year challenged the Delhi High Courts June 1 judgment that held that the regulator had no jurisdiction to fix rates or regulate gas tariffs. The apex court had in August last year sought response from IGL and the Centre.

The Delhi HC order had come on IGLs plea challenging an order from the regulator to cut its 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.

PNGRB had alleged that the HC failed to note that it had not fixed the MRP but only sought to fix the network tariff and compression tariff charges representing cost of transportation which are completely different. The latter is only one of the many components of the former.

As a result of the judgment, a statutory body such as the board is now left without any power to fix transportation tariff for city gas distribution networks and, therefore, unable to discharge the function entrusted to it, the board had earlier argued before the apex court.

As regards to regulation of transmission and distribution (T&D) of these products, according to the government affidavit, PNGRB will oversee access to pipelines and city or local natural gas distribution networks on non-discriminatory, common carrier/contract carrier principle for ensuring a level-playing for all entities.