Business Today

Gas distribution: Fits and Starts

Print Edition: Jan 6, 2013

It has taken a long time, but piped natural gas (PNG) - or compressed natural gas (CNG), they are one and the same - is slowly replacing liquefied petroleum gas (LPG) packed in cylinders as fuel across industrial units and kitchens in several pockets of the country. According to the sector regulator, the Petroleum and Natural Gas Regulatory Board (PNGRB), there are 28 'geographical areas' - whose size can vary from a single city to a whole district - where the network of pipes to supply PNG is already in place. They are also being built in 49 more areas. By 2015, the PNGRB expects to see 201 geographical areas being supplied PNG.

The slow pace in recent years has been primarily due to the legal tussle that erupted between the regulator and Indraprastha Gas Ltd (IGL), which supplies piped gas to Delhi and some of its surrounding areas. When the PNGRB, set up in 2007, sought to auction the licence for supplying piped gas to Ghaziabad, neighbouring Delhi, which IGL had expected to bag as a matter of course, the latter took the regulator to court. It questioned the regulator's authority to issue licences at all, since a key section in the Act setting up the PNGRB had not been notified. The licensing process, and thereby the expansion of piped gas across the country, was thus slowed down. The matter reached the Supreme Court before the section concerned was finally notified by the Petroleum Ministry in November, which has considerably weakened the IGL's position.

But other players have also taken the regulator to court, and their issues remain to be resolved. The last auction, for instance, was completed in February this year. The switch to piped gas may be overdue, but now things are moving. And the benefits will be far-reaching.

Anilesh S. Mahajan

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