The key players and stakeholders in the city gas distribution sector have given their suggestions, comments and views on the Amendment of the Petroleum and Natural Gas Regulatory Board (Determination of Natural Gas Pipeline Tariff) Regulations, 2020 related to introduction of unified tariff for transportation of natural gas.
As per IMC Limited, the proposed regulations are contradictory to the framework of the existing regulations and authorisations of bid out natural gas pipelines as well as to the provisions of Petroleum and Natural Gas Regulatory Board (PNGRB) Act. Besides, it also goes beyond the power of the board to make such regulations. IMC Limited believes that the decision will kill the competition in business of natural gas transportation, which is the basic tenet of business and is kept in mind by the bidders while bidding the tariffs for a period of 25 years. However, it suggests that board should only make the regulation applicable for the non-bid out pipelines from pre-PNGRB times or single organisation pipelines.
Reliance Industries Limited
Reliance Industries Limited (RIL) states that the proposed amendment would significantly benefit number of existing buyers located in far-flung areas away from gas sources as well as new buyers on upcoming and under construction pipelines. As per RIL, the proposed amendment for unified tariff would provide a level playing field to all, instead of benefiting only a few gas sources or gas pipelines and ultimately benefit customers. Besides, it does not discriminate between pipeline entities and keeps all the pipelines revenue neutral including the bid-out pipeline. This would ensure that all pipeline companies earn same tariff they would have earned before unification ensuring pipeline companies do not gain at cost of consumers. Besides, the proposed unification provides level playing field to all the existing, new and upcoming terminals in west and east coasts as well as domestic gas producers as they can reach all customers without any locational advantage or disadvantage. Finally, RIL states that the gas consumers on existing as well as upcoming pipelines will be able to source gas on competitive basis from the existing and new LNG terminals and domestic gas sources, resulting in reduced cost of transportation of gas to end consumers.
Bharat Heavy Electricals Limited
According to Bharat Heavy Electricals Limited(BHEL),the proposed unified tariff will lead to frequent variation in transportation tariff, affecting its working capital planning at Jagdishpur unit in Uttar Pradesh. Gas prices are not fixed as they change as per international market prices. Therefore, according to BHEL, the introduction of variable tariff structure will add further uncertainty to the gas prices and impacting its business as well as the end consumer.Finally, the change in pipeline tariff every fortnight will further impact its day-to-day operations.
Fertiliser Association of India
According to the Fertiliser Association of India (FAI), the impact of proposed tariff regime on fertilisers plants is estimated to be over Rs 4 billion per annum. It states that every urea unit gets the gas at same delivered cost, which is taken into account for calculation of cost of production for reimbursement under the pricing and subsidy policy. Therefore, any increase in cost of gas is expected to affect all urea units irrespective of location. Further, it is also not in favour of fortnightly change in pipeline tariff.
Gujarat State Petronet Limited
Gujarat State Petronet Limited (GSPL) states that while the entity level unification would have resulted in change in revenue of pipeline entity, the unified tariff proposal will make pipeline entity revenue neutral. Further, it will provide opportunity for fertiliser plants to source natural gas from multiple sources, including domestic gas from east coast and Rajasthan. The cost of gas including the transportation cost is pooled for fertiliser sector. Therefore, GSPL suggests that if some fertiliser units pay higher tariff and others pay lower, the overall impact would remain neutral in case of unification on the fertiliser sector.