Unified Tariff Regime for National Gas Grid System

Context: Petroleum & Natural Gas Regulatory Board has amended PNGRB (Determination of Natural Gas Pipeline Tariff) Regulations to incorporate regulations pertaining to Unified Tariff for natural gas pipelines with a mission of ‘One Nation, One Grid & One Tariff). National Gas Grid System means network of all such natural gas pipelines within India which are fully interconnected with each other (including those which are partly commissioned and so interconnected)

Salient Features of Unified Tariff Regime for Natural Gas Pipelines

  • Levelised Unified Tariff: PNGRB has notified a levelized Unified Tariff of Rs 73.93 per MMBTU additional GST tax will be Rs. 0.19/MMBTU. All entities part of National Gas Grid will get the tariff as per their entitlement while customers would pay Unified Tariff applicable for different zones. Difference between the entitlement tariffs to be earned by pipeline companies and unified tariffs paid by customers will be settled between pipeline entities by a settlement mechanism. 
  • Tariff zones for unified tariff:
    • First Tariff zone for unified tariff: Length of 300 km from the entry point on either side of national gas grid system.
    • Second Tariff zone for unified tariff: length between 300 to 1200 km on either side of the first tariff zone on national gas grid
    • Third Tariff zone for unified tariff: Remaining length of national gas grid system on either side of second tariff zone. 
Zone 139.45
Zone 274.97
Zone 399.90
  • Companies covered: National Gas Grid covers all interconnected pipeline networks owned and operated by following entities: Indian Oil Corporation, Oil & Natural Gas Corporation (ONGC), GAIL (India), Pipeline Infrastructure ltd., Gujarat State Petronet Ltd, Gujarat Gas, Reliance Gas Pipelines, GSPL India Gasnet & GSPL India Transco. All these entities will be members of Industry Committee. 
  • Settlement mechanism: The settlement mechanism will be applicable to all the entities including shippers availing transportation services through natural gas pipelines forming part of National Gas Grid System. Out of the members of the Industry Committee 5 members will be selected to form a part of Settlement Committee will decide the ratio of settlement among different entities part of National Gas Grid System. 

Significance of Unified Price for National Gas Grid System

  • Expansion of National Gas Grid: With commissioning of newer interconnected gas pipelines, the national gas grid will keep expanding for Union tariff.
  • Affordable access to natural gas in far-flung areas: This reform will specially benefit consumers located in far-flung areas by making natural gas available at competitive and affordable rates. In the current regime, additive rates are applicable for gas consumers in these areas. 
  • Transition to gas economy: India plans to raise the share of gas in the economy to about 15% by 2030 from 6.4% in 2022. The uniform price mechanism for transportation will aid in this regard. 

About Petroleum & Natural Gas Regulatory Board (PNGRB)

PNGRB is a statutory body formed under the Petroleum & Natural Gas Regulatory Board Act, 2006.

The Board is headed by a Chairperson, a Member (legal) and three other members to be appointed by Central Government.

Functions of PNGRB are:

  1. Protect interests of consumers by fostering fair trade and competition among entities.
  2. Register entities related to:
  3. Authorise entities to:
    • Lay, build, operate or expand a common carrier or contract carrier.
    • Lay, build, operate or expand city or local natural gas distribution network. (CNG networks)
  1. Declare pipelines as common carrier or contract carrier.
  2. Regulate
    • Access to common carrier or contract carrier to ensure fair trade and competition amongst entities.
    • Transportation rates for common carrier or contract carrier.
    • Access to city or local natural gas distribution network to ensure fair trade and competition.
  3. In respect of petroleum, petroleum products and natural gas:
    • Ensure adequate availability.
    • Ensure display of information about maximum retail prices
    • Monitor prices and take corrective measures to prevent restrictive trade practices by the entities.
    • Secure equitable distribution for petroleum and petroleum products
    • Provide and enforce retail service obligations for retail outlets and marketing service obligations for entities.
    • Monitor transportation rates and take corrective actions to prevent restrictive trade practices by entities.
    • Levy fees and other charges
    • Maintain a data bank of information on activities related to petroleum, petroleum products & natural gas.
    • Lay down technical standards, specifications & safety standards related to petroleum, petroleum products, natural gas, pipeline construction, operation & maintenance related to downstream petroleum and natural gas.
  4. Adjudicate and decide disputes arising amongst entities and receive complaints. 

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