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Multiple
regulators for Oil & Gas: Replication of Old Problems?
Jaipur, February 04, 2010
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“Instead of
creating a parallel regulatory body in the oil and
gas sector, the government should strengthen the
existing regulatory body, Petroleum and Natural
Gas Regulatory Board (PNGRB) to enable the
establishment of a sound regulatory environment in
the sector” opines CUTS International, a premier
economic policy research and advocacy group while
reacting to the government’s proposal for creating
a National Gas Highway Development Authority (NGHDA)
for regulating transmission of gas, a function
that the existing regulator (PNGRB) was expected
to shoulder as per provisions of the PNGRB Act
2006.
“The PNGRB was
constituted about two years ago to regulate the
mid stream as well as down stream businesses in
the oil and gas sectors. However, the government
has not notified vital sections of the PNGRB Act
as yet including Section 16 that empowers the
board to issue authorisation to entities for
laying natural gas pipelines” says Pradeep S
Mehta, Secretary General of CUTS International and
an eminent commentator on regulatory issues.
In a recent
judgment by Delhi High Court, it was observed that
PNGRB is not authorised to clear pipeline projects
but can merely inspect them. Meanwhile, the
Ministry of Petroleum and Natural Gas (Mo-PNG)
allotted trunk gas pipelines to Reliance Gas
Transportation Infrastructure Ltd. (RGTIL) and
GAIL India without going though a proper bidding
process. This reflects failure in making the
regulatory processes transparent and impairs
credibility of the existing regulatory agency in
the sector.
The above incident
exposes the toothless nature and lack of
regulatory independence of the PNGRB and the
government’s seeming accommodation of such
aberrations in the functioning of regulators.
From all ominous
indications such inefficiency may also afflict the
proposed regulator whose establishment is in any
case not prudent, given that a regulator (PNGRB)
already exists in the oil and gas sector and that
too without notification.
“The government
should focus on empowering existing regulatory
institutions, rather than merely creating new
ones, to ensure that a transparent and credible
regulatory environment emerges in such key sectors
as oil and gas”, asserts Mehta.
For
further information please contact:
Rajesh Kumar, +91
98879 05287,
rk2@cuts.org
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