New Delhi, March 31 The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed a new tariff policy for long-distance pipelines to provide for charging lower rates to city gas entities that sell CNG for vehicles and piped cooking gas to households.
The PNGRB has issued a public consultation document for changing the zonal tariffs levied on pipelines that carry natural gas from domestic producing fields or sea ports in the case of imports, to users such as power plants, fertiliser units and city gas entities that sell it as CNG for sale to automobiles or pipe it to household kitchens for cooking purposes.
"In yet another far-reaching reform for bringing investments and to increase the gas consumption, especially in CNG and domestic piped natural gas in the country, the PNGRB has brought a proposal for reducing the price of piped natural gas used by domestic consumers and in transport," the regulator said.
The public consultation document has been webhosted for seeking comments from stakeholders on various aspects of tariff regulations like reducing the unified tariff zones to two from three, and levying Zone 1unified tariff to all the CNG and piped natural gas-domestic customers, it said.
The PNGRB regulates the transmission tariffs for natural gas pipelines, and these are fixed to provide a 12 per cent return on capital employed. These tariffs, traditionally, were apportioned along the length of the pipeline and increased as one travelled further from the gas source. This resulted in higher tariffs for consumers located at a longer distance from the source.
To resolve the distance-related dislocation in the pricing of natural gas, a unified tariff for all consumers connected to the natural gas grid was proposed in November 2020 and implemented from April 1, 2023. Against the practice of every incremental 300 km of pipeline from the gas injection point being classified as the successive zone with successively higher tariffs, the PNGRB divided the entire length into three zones — up to 300 km, from 300 km to 1,200 km, and more than 1,200 km, with tariffs of 52.5 per cent of unified tariff for Zone 1 and 75 per cent for Zone 2.
In the new system that it now proposes, 66.17 per cent of the unified tariff will be charged for the first tariff zone and 100 per cent for users on either size of Zone 1. However, CNG and piped natural gas-domestic users anywhere in the country and irrespective of the distance from the source, will be charged the Zone 1 tariff. This would help cut costs for city gas entities that are away from the gas source.
"The proposals also include incentivising the isolated network operators/ pipelines, equal distribution of benefit of volumes beyond the normative threshold with the consumers and pipeline operators and usage of such benefits by pipeline operators for creation of pipeline infrastructure, policy for long term procurement of system use gas by the pipeline operators, etc," the PNGRB said.
The proposal will boost investments in the gas infrastructure, especially in isolated and remote areas, which will tap the isolated gas. The amendments will also help in the development of CNG and PNG-Domestic connections in far-flung areas and benefit major stakeholders like city gas sector, transmission operator, consumers in far-flung areas and will boost the investment in the gas infrastructure, according to the PNGRB statement.
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