The oil and gas sector regulator, Petroleum and Natural Gas Regulatory Board (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. On September 2, 2020, it released a notice on detailed procedure for considering force majeure claims of the city gas distribution (CGD) entities for a time extension. These guidelines have come after the lockdown imposed to contain the spread of COVID-19 delayed or halted city gas projects.

A force majeure clause is included in contracts in order to remove liability for natural and unavoidable catastrophes that might interrupt the expected course of events and prevent participants from fulfilling obligations. It is crucial for CGD entities as they receive licence to retail compressed natural gas (CNG) to automobiles and piped cooking gas to households from PNGRB on the basis of committed minimum work programme such as laying of gas pipelines and setting up CNG dispensing stations.

Several city gas firms had claimed force majeure after work on sites got stalled due to lockdown. However, their claims were not immediately accepted in absence of guidelines listing force majeure events. To address the issue, PNGRB stated that in the event of authorised 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. These conditions include wars, major riots or civil commotion, natural calamities, as well as restrictions imposed by central or state government that prevent or delay project implementation.

PNGRB has asked the licensees to intimate to the board within 15 days from the date of occurrence of the force majeure event. It may also ask the entities to submit any further information deemed necessary by it in order to verify the claims, depending upon which it may allow whole or a part of the period as a force majeure period. Further, PNGRB has stated that it will not consider any requests for allowing force majeure for events/occurrences that are not covered in the definition of force majeure.