The Petroleum and Natural Gas Regulatory Board of India has issued a notice to India city gas distribution companies which declares 73 networks as common carriers. The proposed notice implies no exclusivity to existing operators and the open access could allow other entities to enter and provide CNG services in the named regions.
City gas distributors like Gujarat Gas Ltd., Indraprastha Gas Ltd., Mahanagar Gas Ltd., GAIL (India) Ltd., Adani Total Gas Ltd., and IRM Energy Ltd. may be under pressure in trade today on the back of this notice.
This marks the second negative development for the companies in the sector after the latest edict by Ministry of Petroleum and Natural Gas reduced administered price mechanism gas allocation to the industry by 20%.
Who Has Been Issued Notices?
Gujarat Gas: Notice issued for 20 geographical areas
GAIL (India): Notice issued for 5 geographical areas
Mahanagar Gas: Notice issued for 3 geographical areas
Indraprastha Gas: Notice issued for 2 geographical areas
Adani Total Gas: Notice issued for 3 geographical areas
IRM Energy: Notice issued for 2 geographical areas
About The Latest Notice
The notice issued on Oct. 24, follows the formation of a high-level committee by the regulatory board some time back. The committee was formed to address competition and ensure a level playing field in the Indian CGD sector.
The Petroleum and Natural Gas Regulatory Board has invited the noted entities to present their views before them. The meetings will take place between Nov. 4 and Nov. 20, 2024, following which the board could declare the CGD networks as common or contract carriers.
Also Read: Oil & Gas Q2 Results Preview: Mixed Quarter For OMCs, Gas Distributors To See Volume Growth
Potential Impact Of Networks Being Common Carriers
The notice and the potential declaration stands negative for gas companies like Gujarat Gas, Mahanagar Gas and Indraprastha Gas. Declaring networks as common carriers would lead to higher competition in the space and could reduce profits of the companies. It could also potentially increase regulatory burden on operators and cause delays in network expansion. However, any regulatory action can take significant time to materialise.
On the other hand, higher competition could also lead to lower prices for consumers, and easier infrastructure access to other gas suppliers could lead to higher gas penetration in the country. The declaration could also provide equal opportunities to all entities in the space
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