Petroleum and Natural Gas Regulatory Board (PNGRB) will begin the process to auction gas distribution licenses for hundred cities this month, Oil Minister Dharmendra Pradhan has said.
The government has been encouraging the consumption of natural gas, aiming to raise the share of gas in country’s energy mix from the current 6.5% to 15% in future. Expansion of gas distribution networks to more cities can help boost consumption by households, vehicles and factories.
PNGRB, the downstream regulator, has already given away gas distribution licenses for about 80 cities across the country, and a roll out of 100 more licenses can potentially boost gas consumption sharply. But city gas auctions in the past have been marred by declining interest from the industry, delays and policy hurdles, resulting in far fewer than targeted distribution of licenses. India has about 1,282 compressed natural gas (CNG) stations and about 40 lakh domestic piped gas consumers.
For more than a year, the regulator didn’t have enough board members to be able to quickly decide or award licenses. But with vacancies having filled recently, the board is likely to get back to its job faster.
The government is also targeting to aggressively expand pipelines to secure gas supplies to more and more cities. GAIL, ONGC, BPCL, Indian Oil and Oil India are together planning to build a gas grid in North-East and link it to the Jagdishpur-Haldia pipeline, currently under construction, Pradhan said. GAIL is building the 2500-km Jagdishpur-Haldia pipeline, with the financial support from Centre.
The government is also working on bringing the second wave of reforms in the oil and gas sector, Pradhan said, without elaborating.
He, however, rejected the idea of letting the Directorate General of Hydrocarbons (DGH) evolve into an independent regulator with its cadre of experts, arguing that India’s upstream sector is yet to mature for that. DGH is the technical arm of the Oil Ministry and also acts as a regulator of the upstream sector but depends mainly on the borrowed personnel from state oil companies.
Pradhan also defended market pricing for petrol and diesel, saying the decision to deregulate these fuels were well thought through. In markets, where these fuels are available cheaply, these are available only to a smaller section of consumers, Pradhan said, citing the negative consequences of having administered prices.
Petrol and diesel prices have been rising in the country in line with rise in international rates for the past few months.