Oil regulator issues force majeure guidelines for city gas operators

By: |
September 03, 2020 5:34 PM

The Petroleum and Natural Gas Regulatory Board (PNGRB) in a notice on September 2 detailed the procedure for considering force majeure claims of the city gas distribution (CGD) entities for a time extension.

The duration of the force majeure would be decided by the regulator.

Oil regulator PNGRB has issued a fresh set of force majeure guidelines, listing events such as riots, natural disasters, and restrictions by the government as conditions for allowing more time to complete city gas rollout obligations.

The Petroleum and Natural Gas Regulatory Board (PNGRB) in a notice on September 2 detailed the procedure for considering force majeure claims of the city gas distribution (CGD) entities for a time extension.

Force majeure conditions, it said, include war/hostilities, major riots or civil commotion, natural calamities such as earthquake and floods, and “restrictions imposed by central or state government” that prevent or delay project execution.

PNGRB gives out city gas licence to retail CNG to automobiles and piped cooking gas to households on the basis of committed work programme like laying of gas pipelines and setting up CNG dispensing stations.

The guidelines came after a nationwide lockdown to contain the spread of COVID-19 from March 25 and state-level lockdowns since June hampered city gas projects.

Several city gas firms claimed force majeure after work on sites got stalled due to lockdown. Such claims however were not immediately accepted in absence of guidelines listing events that can trigger force majeure.

“In the event of authorized entity being rendered unable to perform any obligation required to be performed by it as per the work program, due to force majeure, the relative obligation of the entity affected by such force majeure shall be suspended for the period during which such force majeure lasts,” PNGRB said.

The duration of the force majeure would be decided by the regulator.

Force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations.

PNGRB said licensees are required to intimate to the Board within 15 days from the date of occurrence of the force majeure event.

“PNGRB may ask the entity to submit any further information deemed necessary by it in order to verify the claim of the entity,” the guidelines said adding the Board may allow whole or a part of the period as a force majeure period.

“No request for allowing force majeure shall be considered for events/occurrences that are not covered in the definition of force majeure,” it said.

PNGRB said securing permissions from statutory/ local/ other authorities for project works such as laying pipelines or setting up CNG stations is the prime responsibility of the CGD entities.

“Hence, delays on this account cannot qualify as force majeure,” it added.

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