Petroleum and Natural Gas Regulatory Board Regulations for CGD Network 1

Petroleum and Natural Gas Regulatory Board

Regulations

for

CGD Network

1

Application of CGD rules

• Regulation shall apply to entity which is

Laying, building, operating or expanding

or which proposes to

Lay , build, operate or expand a CGD network.

• CGD network shall be designed as per PNGRB technical standard and specifications, safety standards for supplying natural gas on a sustained basis.

2

Volumetric Threshold

Less than 50,000 SCMD per customer

To be supplied only through CGD network

More than 50,000 SCMD & Less than 100,000 SCMD per customer

Consumer’s choice to take from CGD network or a separate consumer pipeline

More than 100,000 SCMD per customer

Through separate consumer pipeline

3

Process for Grant of Authorization

4

Reject the Proposal

In case of single bid Board may go for re bid

Minimum Eligibility Criteria

• Payment of application fees as specified under the PNGRB (levy of fee and other charges) regulations, 2007.

• The entity is either a body corporate or undertakes to become a company registered under the companies Act on being declared as a successful bidder.

• The entity should have a credible plan sourcing natural gas for supply in the proposed CGD network.

• The entity should not have been penalized under section 28 or punished under chapter IX of the PNGRB Act

Minimum Eligibility Criteria- Technical

• Entity having experience of laying & building 300km of hydrocarbon pipeline may be on cumulative basis

• Entity on its own / with joint venture (with 11% equity) having experience of at least one year in O&M of a CGD network

• Entity having at least three technically qualified personnel with experience in

a) Commissioning of hydrocarbon pipeline b) O&M of natural gas pipelines, gas compressors c) Commercial issues including gas pricing, accounting d) Safety of natural gas infrastructure.

Minimum Eligibility Criteria-Financial

Tier Population (in Million)

Minimum combined Net Worth of the entity along with its promoters available for investments in single CGD network (Rs in Million)

I 5 million or more 1500 for a population of 5 million and proportionately higher for bigger cities

II 1 million or more but less than 5 million 1000

III 0.5 million or more but less than 1 million 500

IV 0.25 million or more but less 0/50 million 250

V 0.1 million or more but less than 0.25 million 100

VI Less than 0.1 million 50

Bid Bond(E.M.D)

Tier Population Minimum Bid bond amountRs-Million

I 5 million or more 50 for a population of 5 million and proportionately higher for higher population



IV 0.25 million or more but less 0.50 million 15

V 0.1 million or more but less than 0.25 million

10


8

Bid Parameters

Parameter Weightage

Lowness of the present value* of the overall unit network tariff over the economic life of the project

40%

Lowness of the present value* of the compression charge for CNG over the economic life of the project

10%

Highness of the present value* of the inch-km of steel pipeline during the period of exclusivity in terms of exemption from the purview of the contract carrier or common carrier

20%

Highness of the present value* of the number of PNG domestic connections during the period of exclusivity in terms of exemption from the purview of the contract carrier or common carrier

* Present value to be computed at discount rate of 14%

30%

9

Performance Bond

Tier Population Amount( Rs in million)

(5% of the project cost or the following whichever is higher)

I 5 million or more 100



IV 0.25 million or more but less 0.50 million 30

V 0.1 million or more but less than 0.25 million

20


10

Regulations

for

Exclusivity for City or Local

Natural Gas Distribution Networks

11

Types of Exclusivity

• Exclusivity for laying , building and expanding CGD network

• Exclusivity from the purview of the common carrier or contract carrier

12

Laying, Building, Expanding CGD Network

• Exclusivity period for the economic life of the project is 25 years

• Entity to meet service obligations ; in case of default, it may lose exclusivity

• PNGRB may consider extending exclusivity by a period of 10 years beyond economic life of the project

13

Common Carrier or Contract Carrier

• Five years from the date of authorization in case of new projects(marketing exclusivity )

• In case of existing projects

Three years * in case the project is under operation for three years or more before the appointed day

Five years * in other cases

* from he date of commencement of physical laying, building , operation or expanding the network

14

Service Obligations

During the period of exclusivity from the purview of the common carrier or contract carrier

• Provide domestic PNG connections as per bid*

• Lay/build steel pipeline as per inch-km bid*

• Reach all wards or charge areas

• Provide domestic PNG connectivity at demand within a distance of 25 meters of the metering unit at consumer end till the tap-off point

15

Service Obligations

Post Exclusivity

• Continue to expand the network to meet the requirement of its own customers and those of other entities.

• Allow third party access on a non-discriminatory basis to other entities desirous of using the network

16

Default & Termination

In case of failure of service obligation

• 25% of Performance bond shall be en-cashed for the first default

• 50% of Performance bond shall be en-cashed for the second default

• 100% of Performance bond shall be en-cashed for the third default and authorization shall be terminated

17

Default & Termination

In addition Board may levy civil penalties u/s 28 of PNGRB act

•Rs 1 Cr (max penalty)+Rs 10 Lacs per day continuation of default

In case default is with regard to restrictive trade practice

•5 times of unfair gain made by entity

or Rs 10 Cr which ever is higher

•In addition Board may levy Rs 25 Cr penalty (max) + Rs 10 Lacs. per day continuation of default

18

Thanks

19

Documents

Petroleum and Natural Gas Regulatory Board Regulations for CGD Network 1