PETROLEUM AND NATURAL GAS REGULATORY BOARD (AUTHORIZING ENTITIES TO LAY, BUILD, OPERATE OR EXPAND CITY OR LOCAL NATURAL GAS DISTRIBUTION NETWORKS) REGULATIONS, 2008
(1) These regulations may be called the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008.
(2) They shall come into force on the date of their publication in the Official Gazette.
(1) In these regulations, unless the context otherwise requires,-
(a) "Act" means the Petroleum and Natural Gas Regulatory Board Act, 2006;
(b) "appointed day" means the date of October 1, 2007 when the Central Government notified the establishment of the Petroleum and Natural Gas Regulatory Board;
(c) "authorized area" means the specified geographical area for a city or local natural gas distribution network (hereinafter referred to as CGD network) authorized under these regulations for laying, building, operating or expanding the CGD network which may comprise of the following categories, either individually or in any combination thereof, depending upon the criteria of economic viability and contiguity as stated in Schedule A, namely:-
(i) geograp
(1) These regulations shall apply to an entity which is laying, building, operating or expanding, or which proposes to lay, build, operate or expand a CGD network.
(2) A CGD network shall be designed to operate at a pressure as specified in the relevant regulations for technical standards and specifications, including safety standards for maintaining the volumes of supply of natural gas on a sustained basis to meet the following requirements, namely:-
(a) customers having requirement of natural gas upto 50,000 SCMD shall be supplied through the CGD network;
(b) customers having requirement of natural gas more than 50,000 SCMD and upto 100,000 SCMD shall be supplied-
(i) through the CGD network; or
(ii) th
(1) An entity desirous of laying, building, operating or expanding a CGD network shall submit an expression of interest to the Board in the form of an application at Schedule B alongwith an application fee as specified under the Petroleum and Natural Gas Regulatory Board (Levy of Fee and Other Charges) Regulations, 2007.
(2) The Board may suo-motu invite bids from entities interested in laying, building, operating or expanding a CGD network for any specified geographical area.
(1) The Board may carry out a preliminary assessment of the expression of interest with respect to the following, namely :-
(a) natural gas availability position;
(b) possible connectivity with an existing or proposed natural gas pipeline for supply of natural gas to the city gate of the proposed CGD network, including LNG supplies by tank trucks or tank wagons and CNG by cascades; and
(c) any other relevant issue as the Board may consider necessary.
(2) The Board may, within fifteen days of the receipt of expression of interest and based on its preliminary assessment, either issue an open advertisement in at least one national and one vernacular daily newspaper (including webhosting) publishing receipt of an expression of interest and commencement
The Board may suo-motu form a view regarding the development of a CGD network in a specific city or a geographic area, and in such a case, the procedure as specified in regulation 5 (except aspects relating to the expression of interest shall be replaced by project details as prepared by the Board) shall apply.
(1) The Board, while considering the proposal for authorization, shall tabulate and compare all financial bids meeting the minimum eligibility criteria, as per the bidding criteria given below, namely:-
(a) lowness of the present value of the overall unit network tariff for usage of the proposed CGD network by all categories of customers of natural gas (including supply of natural gas to online compressor for CNG) over the economic life of the CGD network project (twenty five years from the date of authorization). The entity is required to bid for the tariff charge for each year of the economic life of the project. This shall have a weightage of forty percent;
(b) lowness of the present value of the compression charge for CNG for dispensing in the CNG stations in the proposed CGD network over the economic life of the project. The entity
(1) The network tariff for transportation of natural gas in the CGD network shall be fixed as per the network tariff bid under clause (a) of the sub-regulation (1) of regulation 7 and shall be recovered from all categories of customers of PNG and CNG.
(2) The compression charge for CNG in the CGD network shall be fixed as per the compression charge for CNG bid under clause (b) of the sub-regulation (1) of regulation 7 and shall be recovered from the customers of CNG only.
(3) The entity shall recover the network tariff and the compression charge for CNG separately through an invoice without any premium or discount on a non-discriminatory basis.
(4) Any cost subsequent to the online compression of natural gas into CNG, such as, towards storage and transportation of CNG in a cascade mounted syst
3[(1) Grant of authorization shall be issued to the selected entity after it furnishes the performance bond in the form of demand draft or pay order or bank guarantee from any scheduled bank for the amount equal to that of bid bond and the bank guarantee shall be valid for the period of exclusivity as granted to the entity under the provisions of the Petroleum and Natural Gas Regulatory Board (Exclusivity to City or Local Natural Gas Distribution Networks) Regulations, 2008 and thereafter for the period of grant of authorization by the Board.
(2) The amount of the bid bond and performance bond shall be rounded off to the nearest multiple of lakh rupees and for the purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of lakh, then, if the last figure in that amount is fifty thousand or more, the amount shall be increased to
10[(1) The selected entity shall be issued a letter of intent (LOI) to grant authorization upon finalization of the bid. The entity shall be required to furnish Performance Bank Guarantee within 15 days of issue of LOI and complete such other formalities as may be directed by the Board. Upon furnishing the Performance Bank Guarantee and completion of other formalities, the authorization shall be granted to the selected entity in the form of Schedule D.]
(2) The grant of authorization is subject to the entity achieving a firm natural gas tie-up and a financial closure as per regulation 11.
(3) The grant of authorization to the entity shall not be renunciated by way of sale, assignment, transfer or surrender to any person or entity during the period of three years from the date of its issue.
(4)
(1) The entity authorized under regulation 10 shall enter into a firm natural gas supply agreement 8[or Heads of Gas supply Agreement (HOA/ Memorandum of Understanding (MOU) for gas supply with natural gas producer/ marketer] for the proposed CGD network project with any entity owning natural gas in a transparent manner on the principle of "at an arm's length" for a period equal to or more than the exclusivity period for exemption from the purview of common carrier or contract carrier allowed under the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008 within 11[one hundred and twenty days] of the date of issue of the authorization.
(2) The volume of natural gas supply under the agreement referred to in sub-regulation (1) shall be equal to at least fifty percent of the volumes considered in the determinatio
The period of exclusivity to lay, build, operate or expand a city or local natural gas distribution shall be as per the provisions in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.
8[Provided that in case flow of natural gas in the designated transmission pipeline is delayed for a period beyond three months from the scheduled date as indicated and is also later than the date CGD network is ready to take gas for reasons not attributable to the authorized CGD entity selected through the bidding process, the Board may extend the exclusivity period for exemption from the purview of common carrier or contract carrier by a period corresponding to the difference in the actual and scheduled natural gas flow in the transmission pipeline serving the authorized geographical area or the date when CGD network i
(1) An authorized entity shall provide, on a quarterly basis, a progress report detailing the clearances obtained, targets achieved, expenditure incurred, works-in-progress and other relevant information in the form at Schedule E.
(2) The Board shall seek compliance by the entity to the relevant regulations for technical standards and specifications, including safety standards through conduct of technical and safety audits during the commissioning phase as well as on an on-going basis thereafter for ensuring safe commissioning and operation of the CGD network.
(3) The Board shall monitor the progress of the entity in achieving various targets with respect to the CGD network project, and in case of any deviations or shortfall, advise remedial action to the entity.
(1) The entity may take an interest-free refundable security deposit from domestic PNG Customer towards security of the following equipments and facilities including the labour cost of installation towards last mile connectivity, that is, between the riser isolation valve before the metering unit and the suraksha hose pipe connecting the burner in the customer's premises for an amount not exceeding rupees five thousand for a single connection, namely:-
(a) riser isolation valve before the metering unit;
(b) ten meters of pipe up to the metering unit;
(c) metering unit;
(d) five meters of pipe or tube from the metering unit up to the excess flow check valve-cum-isolation valve;
(e) excess flow check valve-
(1) The entity laying, building, operating or expanding a CGD network must comply with the quality of service standards as specified in Schedule F.
(2) The performance of the entity in complying with the quality of service standards shall be periodically assessed by the Board and compared against the minimum prescribed benchmarks and a performance consistently below the minimum prescribed benchmark may lead to the consequences specified under regulation 16.
(1) An authorized entity shall abide by all the terms and conditions specified in these regulations and any failure in doing so, except for force majeure, shall be dealt with as per the following procedure, namely:-
(a) the Board shall issue a notice to the defaulting entity allowing it a reasonable time to fulfill its obligations under the regulations;
(b) no further action shall be taken in case remedial action is taken by the entity within the specified period to the satisfaction of the Board;
(c) 14[in case of failure to take remedial action, the Board may encash the performance bond of the entity equal to percentage shortfall in meeting targets of inch-kms and/or domestic connections. Provided that, the value so encashed would be refunded, if the entity achieves the cumulative targets at
(1) The entity shall submit relevant information along with supporting documents in the form as in Schedule H within a period of one hundred and eighty days from the appointed day.
(2) The entity shall abide by the terms and conditions of the authorization by the Central Government including obligations, if any, imposed by the Central Government.
(3) The entity shall abide by the relevant regulations for technical standards and specifications, including safety standards and the quality of service standards as specified under regulation 15.
(4) The Board may consider grant of exclusivity on such terms and conditions as per the provisions in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.
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(1) An entity laying, building, operating or expanding a CGD network at any time before the appointed day but not duly authorized to do so by the Central Government shall apply immediately for obtaining an authorization in the form as at Schedule I.
(2) The Board may take into consideration the following criteria while considering the application for grant of authorization, namely:-
(a) the entity meets the minimum eligibility criteria as at specified in clauses (a) to (e) and (i) of sub-regulation (6) of regulation 5 before the appointed date and is possessing all necessary statutory clearances, permissions, no objection certificates from the Central and State Governments and other statutory authorities;
(b) an entity which is not registered under the Companies Act, 1956 at the time of submit
If any dispute arises with regards to the interpretation of any of the provisions of these regulations, the decision of the Board shall be final.
Schedule A
[see regulations 2 (1) (c) and 5 (4)]
Basis for defining authorized area for laying, building, operating or expanding CGD network
The specified geographical area in respect of an authorized area for a CGD network as per regulation 2 (1) (c) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 may be determined considering the following criteria of economic viability and geographical contiguity, namely:-
1. Economic viability.
The authorized area should have natural gas demand potential over various categories of customers to prima-facie justify investments in laying, building,
Schedule B
[see regulations 4 (1) and 5 (6)]
Application form for submitting expression of interest by an entity desirous of laying, building, operating or expanding a CGD network
A. Only an entity which complies with the minimum eligibility criteria as per regulation 5 (6) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 is eligible to submit its application for submission of expression of interest to the Board.
B. Entities must enclose documentary proof in support of its meeting the minimum eligibility criteria.
C. The entity submitting the expression of interest must submit the fol
1[SCHEDULE C
[see regulation 5 (7)]
Application-cum-bid for grant of authorization for CGD network
To,
The Secretary,
Petroleum and Natural Gas Regulatory Board, Ist
Floor, World Trade Centre
Babar Lane, Connaught Place,
New Delhi-110 001.
Sub: Application-cum-bid for grant of authorization for laying, building, operating or expanding city or local natural gas distribution network in the proposed geographical area of_____ in the State or Union Territory of under the Petroleum and Natural Gas Regulatory Board (Authorizing Entitie
SCHEDULE D
[see regulations 10 (1) and 18 (7)]
Grant of authorization for laying, building, operating or expanding CGD network
To,
Subject: Grant of authorization for laying, building, operating or expanding CGD network in the authorized area of <______> in the State or the Union Territory of <______> under the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008
Sir/Madam,
With reference to your application-cum-b
Schedule E
[see regulation 13 (1)]
Quarterly submission of data by authorized entity
A. The data and information required to be submitted by the entity in the following form shall be analyzed by the Board by comparing the -
(1) actual progress made by the entity versus the physical and financial targets, identified in its DFR;
(2) actual number of domestic customers connected by PNG versus the numbers committed in the bid or as fixed by the Board for the entities authorized by the Central Government before the appointed day or for the entities laying, building, operating or expanding the CGD network before the appointed day and authorized by the Board in case such entities have sought exclusivity; and
Schedule F
[see regulation 15 (1)]
Quality of Service Standards
General.
The purpose of specifying the quality of service standards is to specify the minimum level of performance expected of the entity in laying, building, operating or expanding the CGD network in terms of service to be provided to the customers and other entities. In order to enable the entity to satisfactorily comply with the quality of service standards, other stakeholders, like, customers and other entities are also expected to diligently fulfill certain minimum responsibilities. While the authorized entity shall have to mandatorily comply with the quality of service standards, it may widely advertise the minimum responsibilities expected of the customers and other entities and
Schedule G
[see regulation 16 (1) (d)]
Procedure for the termination of grant of authorization of CGD network
The procedure for implementing the termination of the authorization of the entity to lay, build, operate or expand a CGD network following default by the entity as per the provisions of regulation 16 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, is as under:
1. On approval of termination of the authorization by the Board, the entity shall be required to submit a detailed statement of the ongoing activities in the CGD network, investments, liabilities and such other information as may be directed by the Board within a
Schedule H
[see regulation 17 (1)]
Information to be provided for CGD network authorized by Central Government before the appointed day
To,
The Secretary,
Petroleum and Natural Gas Regulatory Board,
1st Floor, World Trade Centre
Babar Lane, Connaught Place,
New Delhi-110 001.
Information in Respect of CGD Network in the City or Area of _____________________________________in the State or the Union Territory of____________
(Attach separate sheets for providing information wherever nece
Schedule I
[see regulation 18 (1)]
Application for grant of authorization for CGD network to entities not authorized by Central Government
To,
The Secretary,
Petroleum and Natural Gas Regulatory Board,
1st Floor, World Trade Centre
Babar Lane, Connaught Place,
New Delhi-110 001.
Application for grant of authorization for City or Local Natural Gas Distribution project in the city of_____________________________________ in the State or the Union Territory of____________
(Attach separate
Schedule J
[see clause 13 (c) of the form of grant of authorization in Schedule D]
Service Obligations of an Entity
1. General.
a) The entity shall obtain all statutory permits, clearances and approvals from the concerned approving authorities and shall at all times ensure the validity of said permits, clearances and approvals.
b) During the continuance of the authorization, the entity shall supply natural gas to the city and its inhabitants in accordance with the terms of this authorization, charge the approved tariff, not change the domestic PNG price for the end customers by more than once in a quarter and abide by the extant rules and regulations, including such revisions as the case may be.
SCHEDULE K
[See regulation 5 (6) (e) (i)]
Methodology for Computation of Net worth
Methodology for Networth Computation under Method 1:
Subscribed & Paid up Equity Capital
Add: Reserve & Surplus (excluding revaluation reserves)
Less: Miscellaneous Expenditure not written off
Less: Reserves not available for distribution to equity shareholders
Total Net worth
Methodology for Networth Computation under Method 2:
By valuation of assets on the following basis:
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