IGL demands Delhi sale monopoly end only in '13

20 Dec 2011

Companies in the city gas distribution (CGD)business wishing to enter the fast-growing compressed natural gas (CNG) marketof Delhi might have to wait longer. The stipulated marketing exclusivity ofDelhi’s monopoly CNG player, Indraprastha Gas Ltd (IGL), ends on December 31.However, the company has demanded that the three-year exclusivity period becounted from the date when Section 16 of the Petroleum and Natural GasRegulatory Board (PNGRB) Act was notified, on July 15, 2010, and not from thedate when the company got authorisation, in January 2009.

Indraprastha Gas has writtento the petroleum and natural gas ministry and the PNGRB in this regard. Sincethe Board had no powers before July 15, 2010, they have no powers to determineand impose an exclusivity period. The period should start from July 15, 2010and end on July 14, 2013. PNGRB regulations provide for a marketing exclusivity ofthree years for companies present in a city prior to the regulations and offive years for new ones. Though IGL was present in Delhi since 1998, it wasformally granted authorization for the city gas distribution business in Delhiand the National Capital Region on January 1, 2009. Therefore, according tocurrent PNGRB regulations, the exclusivity period should end on December 31,2011.

Companies in the city gas business are alsoentitled to a network exclusivity of 25 years, extendable by another 10 yearsif the operator meets all the terms and conditions. While this 25-year periodends in 2033, according to the original PNGRB regulations, if the governmentand Board agree to the demand of IGL, it will end in July 2035. IGL is a jointventure between the Delhi government and Union government-owned BharatPetroleum and GAIL India. The company was formed in 1998 to take over CGDoperations in Delhi, which got a boost from a Supreme Court order asking allcommercial transport in Delhi to move to this fuel.

Related Indraprastha Gas Ltd. Links:

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