Regulator cannot set natural gas tariff, rules SC

The Supreme Court has dismissed an appeal by Petroleum and Natural Gas Regulatory Board (PNGRB) against the Delhi High Court decision to quash its order fixing the prices of CNG and PNG in Delhi and adjoining areas.

A bench headed by Justice Dipak Misra rejected PNGRB's appeal claiming it had all rights to determine the prices of compressed natural gas (CNG) and piped natural gas (PNG).

The Delhi High Court had, in its order dated 1 June 2012, set aside PNGRB's 9 April 2012 order slashing the network tariff and compression charges for CNG distributed by Indraprastha Gas Limited (IGL) in the capital and adjoining areas, terming it as ''illegal''.

The high court had said the PNGRB was not ''empowered'' to fix or regulate the maximum retail price (MRP) at which the gas is to be sold by retailers.

''The board is also not empowered to fix any component of network tariff or compression charge for an entity such as the petitioner (IGL), having its own distribution network. The provision of the regulations, so far as construed by the board to be so empowering it, is held to be bad/illegal,'' the court had ruled.

IGL had moved the high court on the plea that PNGRB did not give it a hearing and calculated the tariff on the basis of the 2008 price levels for various inputs and charges.

IGL had pleaded that the board had no right to decide on its network tariff and selling price.

The board, in its order, had asked IGL to cut down its network tariff by 63 per cent with retrospective effect. It had also asked the company to refund the difference to its customers for the period from 1 April 2008 till the date of issuance of order for CNG and piped gas.

The board had ordered the company to reduce its network tariff by 63 per cent to Rs38.58 per million British thermal units (mmBtu) as against Rs104.05 per mmBtu sought by the company.

It had also cut compression charge for CNG by 59 per cent to Rs2.75 per kg from Rs6.66 per kg proposed by the company.