The Hindu Business Line : Gas transmission foray: Source tie-up unlikely to be pre-condition

Objectives
The policy is aimed at facilitating open access for all players to the pipeline network on a non-discriminatory basis and promoting competition among entities.

New Delhi May 9 Confirmed source of gas supply may not be a pre-requisite for companies wanting to enter the gas transmission business. Indications are that the guidelines being prepared by the Petroleum & Natural Gas Regulatory Board (P&NGRB) are unlikely to make gas source tie-up a precondition for entering the business.

Bid criteria

Sources told Business Line "we may give a time frame as no one would want the pipeline to run dry. However, as part of the bid criteria to enter the business, confirmation of gas source may not be prescribed in the beginning." The board expects to put in place the regulations for the smooth implementation of the natural gas pipelines and city or local gas distribution networks.

This would in effect make it easier for the companies such as Anil Ambani-promoted Reliance Fuel Resources Ltd to tap the sector. Reliance Fuel Resources had approached the Ministry with a proposal to lay a pipeline through Kakinada (Andhra Pradesh) to Dadri, where Reliance Energy Ltd plans to set up a 5,600-MW power project. It has also proposed to set up city gas distribution networks in cities falling along the pipeline for supplying natural gas to industrial, commercial, domestic and automobile sectors. The company proposes to complete the project in two years once it gets all the necessary clearances.

Reliance Fuel plans

The company, which plans to lay a Rs 16,000-crore natural gas pipeline to bring gas from Krishna Godavari Basin to its proposed Dadri power plant in Uttar Pradesh, has been facing a few hurdles. The company was asked by the Petroleum Ministry to first confirm the source of gas supply, before it was given a go-ahead for the pipeline project.

Consequently, the proposal for laying the gas pipeline seems to be largely dependent on the arrangement between Reliance Industries Ltd (RIL), led by Mr Mukesh Ambani, and Mr Anil Ambani's company for sale and purchase of gas.

While the Petroleum & Natural Gas Regulatory Board (P&NGRB) Act, 2006 provides the legal framework for the development of the natural gas pipelines and city or local gas distribution networks, the policy unveiled by the Petroleum Ministry will provide the crucial links for those in the business.

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