Why Did Centre Cut Gas Allocation To City Gas Distributors? PNGRB’s Gajendra Singh Reveals

The central government's recent decision to reduce gas allocation to city gas distribution companies under the administered price mechanism follows a decline in overall gas volumes, said Gajendra Singh, member of the Petroleum and Natural Gas Regulatory Board.

Over the weekend, the government had reduced APM gas allocation to the city gas distributors by another 20%, marking the second straight month of reduction in gas allocation.

Talking to NDTV Profit, Singh explained the reason, even though the Centre’s policy for gas distribution prioritises allocation of APM gas to CGD companies.

He said that the APM gas supplied to CGDs was being produced in the Mumbai High and its discovery was made in 1986 or 1987. And this asset has "already reached the phase where a decline has started". When Mumbai High does not have enough volume, "reduction in allocation will need to be applied”.

Predicting that at one point of time, the allocation from Mumbai High could touch nil, Singh explained, "Initially, priority was given to power, fertiliser and all other sectors." And now, those sectors don't get it. Instead, city gas distributors were given priority. However, he said that "overall volume is declining. At one point, maybe in 2–3 years time, it will go down to nil."

Earlier, on Oct. 25, the PNGRB had issued a notice to CGDs with a proposal to declare 73 networks as common carriers. The notice implies that entities other than CGDs can enter and provide CNG services.

It also stated that a high-level committee will be formed by the regulatory board to address competition and ensure a level-playing field in the Indian CGD sector.

Singh told NDTV Profit that the proposal to declare networks as common carriers is a regular activity.

He added that due to the entry of new firms into the gas distribution business, customers are likely to benefit from the increased competition vis-a-vis a reduction in prices.

“With open access, consumers will be able to get cheaper gas from any other player in their network. We are under discussion with different entities as to how to do it. We have to listen to the concerns of the entities,” he noted.