Highlights of the Bill

  • The Petroleum and Natural Gas Regulatory Board Bill, 2005 establishes the Petroleum and Natural Gas Regulatory Board (PNGRB) to regulate downstream activities in the petroleum and natural gas sector.
  • The PNGRB shall regulate the laying and expanding of (a) transmission pipelines for gas and petroleum and (b) city/ local gas distribution networks.
  • The entity that lays the pipeline will have the right of first use and any other entity will have to pay it a transportation charge for use of the pipeline.
  • Entities will have to register with the PNGRB to market petroleum products and natural gas, operate LNG terminals and establish storage facilities beyond specified capacity.
  • The PNGRB will have the same powers as a civil court to settle disputes. The Appellate Tribunal under the Electricity Act will serve as the Appellate Tribunal for this Act.

Key Issues and Analysis

  • The Bill proposes a separate regulator for the petroleum and natural gas sector independent of the electricity regulator. Several countries have a common energy regulator for both gas and electricity.
  • The Bill does not elaborate on whether the setting up of refineries will continue to be monitored by the Petroleum Ministry or whether the PNGRB will oversee this activity.
  • Transportation tariffs for pipelines will be regulated by the PNGRB and determined on a cost of service basis. This does not incentivise cost-efficiency.
  • The Bill does not provide sufficient clarity on how the PNGRB will enforce retail service obligations.
  • There appears to be an overlap in the jurisdiction of the PNGRB and the Competition Commission of India.

Read the complete analysis here