The key players and other stakeholders in the CGD sector have given their suggestions, comments and views on the Draft Petroleum and Natural Gas Regulatory Board (Determination of Natural Gas Pipeline Tariff) Second Amendment Regulations, 2020 related to determination of unified tariff in respect of integrated natural gas pipeline system.

CGDIndia provides a summary of suggestions and comments of select players in the industry……..

Adani Gas Limited

Adani Gas Limited (AGL) has asked for clarity in respect of the applicable tax collection, filing and input tax credit reconciliation under the unified tariff regime. It has also suggested that any proposed mechanism should be tax efficient for all the stakeholders. Further, according to the AGL, there could be significant variation in actual volume distribution across the pipelines and resultant unified tariff. While the proposed mechanism ensures that the gas transporting entities are revenue neutral, its impact on the customers across the different zones is not clear. Therefore, AGL suggests that the computation of the unified tariff is published for the benefit of all the customers.

GAIL (India) Limited

GAIL (India) Limited is not in favour of the proposed revised amendment regulations. It has requested the PNGRB to implement the determination of unified tariff at entity level only, in line with the CCEA decision dated September 21, 2016 for the Jagdishpur-Haldia and Bokaro-Dhamra Pipeline project, which inter-alia has made reference for fixation of unified/pooled tariff for GAIL’s inter-connected cross-country pipelines. According to GAIL, the dual tariff scheme may not be in consonance with the Act or the interest of consumers as despite contractually using an actually authorised common carrier pipeline, customers may be required to pay a higher unified tariff instead of the approved tariff fixed by PNGRB for using that authorised common carrier pipeline.  Besides, it believes that the inclusion of the already awarded bid-out pipelines may not be in conformance with the notified Regulation 11 of Authorizing Regulations, as per which, the zonal tariffs as per the awarded bids shall have to be recovered from the customers without any premium/discount. Therefore, any post-facto change in the recovery of already awarded bid-out tariff may not be in consumer interest. Besides, it may also lead to inefficient transportation tariff rate biddings by the entities, states GAIL.

Maharashtra Natural Gas Limited

Maharashtra Natural Gas Limited (MNGL) believes that the present methodology for determination of transmission tariff is appropriately designed for different natural gas pipelInes with different zones in a specific manner. Therefore, it recommends the current methodology to be continued. MNGL has secured three new GAs, namely, Nashik, Valsad and Dhule (excluding existing GA), Sindhudurg in Maharashtra and Ramanagara in Karnataka. It has started the CNG Stations in Nashik and Sindhudurg and industrial sales in Ramanagara after incurring a substantial capex investment. It believes that the unified tariff will impact the CNG prices at these locations and frequent changes in CNG prices in these new GAs would result in uncertainty in the sales volume and trust amongst its customers. MNGL states that it is currently struggling with the outcomes of Covid-19 pandemic. The implementation of the variable tariff structure will further add uncertainty, impacting its business adversely.

Reliance Gas Pipelines Limited

Reliance Gas Pipelines Limited has suggested monthly fixation of unified tariff as the proposed frequency of fixation of unified tariff on fortnightly basis wherein the shipper will know the unified tariff once the fortnight is over could create frequent settlement issues. Besides, it suggests that there should be clear and detailed settlement methodology which should be monitored by a committee appointed by PNGRB, which will have representation from all stakeholders. Further, it believes that invoicing entity should be unified entry point based as it will considerably reduce the requirement of inter-transporter adjustments and allow proper utilisation of the input tax credit amount.

Think Gas Limted

Think Gas Limited (TGL) has suggested that PNGRB should not include all the inter-connected pipelines for unification and do it region-wise or entity-wise. It believes that if tariffs for majority of existing customers are increasing even after unification, then the overall utilisation of all the pipelines are not up to the level where unification should be introduced. Out of the total 193 geographical areas (GAs) authorised to TGL, 135 GAs have been authorised in 9th and 10th round of CGD bidding, and are at the initial stage of development. According to TGL, most of these GAs are far from the gas source, therefore, any increase in tariff for transportation of natural gas up to such CGD entity’s CGS will put additional burden on the CGD entities. It believes that the substantial increase in tariff may adversely impact the private/foreign investment decisions in the CGD industry. It has requested that PNGRB to ensure that there is no increase in tariff for the customers located far from the source, and help to reduce the transmission tariff from current levels.

Torrent Gas Limited

Torrent Gas Limited (TGL) has requested to maintain the status quo as the suggested unified tariff is expected to be more than their current weighted average cost of most existing entities with multiple GAs. According to the TGL, this is a case of cross subsidisation of tariff keeping the transporters revenue neutral but severely impacting the customers in different zones.