City gas distribution (CGD) networks and pipelines for carrying natural gas and petroleum are essential facilities. Laying of CGD network is authorised by the Petroleum and Natural Gas Board (PNGB) under the Petroleum and Natural Gas Regulatory Board (PNGRB) Act. The CGD network developer enjoys natural monopoly due to the cost of creating CGD network/pipelines, usage, availability of space and various factors. Person laying CGD network is entitled to exclusive use of the network for a specified period.
Section 20(4) of the PNGRB Act empowers the PNGB to decide on the period of exclusivity to lay, build, operate or expand a city or local natural gas distribution network. PNGB has issued regulations (CGD Regulations) which prescribes the period of exclusivity to be three years or five years. Once the period of exclusivity comes to an end, the CGD network is to be declared as a common carrier or contract carrier, which means that access to the CGD network will be available to third party users for supplying natural gas. Read More…
Credit By: Business Standard
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