Gail's Jagdishpur-Dhamra gas pipeline project hits regulatory bump

Gail India's Rs12,940 crore Jagdishpur-Haldia-Bokaro-Dhamra natural gas pipeline project, which was recently cleared by the Cabinet Committee on Economic Affairs (CCEA), has hit a regulatory roadblock with the Petroleum & Natural Gas Regulatory Board questioning the validity of the government's decision.

According to the regulator, the cabinet cleared the natural gas pipeline project without regulatory authorisation, the board stated in a letter to the ministry of petroleum and natural gas.

No gas pipeline or city gas distribution network could be laid, built, operated or expanded without authorisation from the regulator, it stated in the letter to the petroleum ministry.

While the government, in public interest, may form an opinion about the need for pipeline and city gas distribution, the regulator said, it cannot issue directions to the sector regulator to award any project to any specific company, an Economic Times report quoted the regulator as stating in the letter.

The ministry may suggest to the regulator to invite applications from those interested to carry out the project in a transparent and objective manner, in accordance with the provisions under the PNGRB Act 2006, it said.

The pipeline project was proposed to supply natural gas to the cities of Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, Kolkata and Cuttack.

It is also proposed to supply gas under the Rs18,000 crore Hindustan Urvarak Rasayan projects that Prime Minister Narendra Modi has promised to Uttar Pradesh, Bihar and Jharkhand.

In a letter to the regulator, the ministry of petroleum and natural gas said the government would issue a policy directive to PNGR under Section 42 of the PNGRB Act to authorise Gail to develop city gas distribution networks along with the pipeline project.

Vandana Sharma, secretary at the Petroleum & Natural Gas Regulatory Board, in the letter to the ministry mentioned that as per legal advice, the central government cannot nullify the regulator's statutory powers.

''The city gas distribution network development and natural gas pipeline development are two distinct operations well defined in the PNGRB Act, 2006. The above policy directive of authorising the city gas network and the natural gas pipeline may create precedence for existing natural gas pipeline operators and future projects,'' the report cited the board's letter as stating.