Oil Ministry reverses earlier order on new CNG stations

In a U-turn on setting up of CNG selling stations, the Oil Ministry has said only those firms that are authorised by oil regulator can set up outlets to retail compressed natural gas (CNG) to automobiles.

The ministry had, in September, held that Petroleum and Natural Gas Regulatory Board (PNGRB) approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities.

It, however, on Wednesday issued a fresh order saying it 'is in the process of formulating guidelines relating to grant of rights to entities for sale of CNG as transportation fuel through their CNG stations.'

'In the meanwhile, it is conveyed that no entity except those who are authorised by PNGRB under PNGRB Act, 2006, to establish a city or local gas distribution network in their respective Geographical Area (or city)... may set up a new CNG station till further order,' it said. The ministry had on 16 September, 2013, issued an order saying 'no authorisation from PNGRB is required for setting up of a CNG station.'

Order which was issued to state-owned GAIL India Ltd - the nation's largest gas distributor, came as a surprise as PNGRB had since 2009 been issuing licences to entities for city gas distribution (CGD) networks, essentially for retailing CNG to automobiles and piped cooking gas (piped natural gas or PNG) to households. 'CNG station is not covered in the definition of 'city or local natural gas distribution network' provided in the PNGRB Act, 2006. No authorisation from PNGRB is required for setting up of a CNG station,' it had said in the letter to GAIL India chairman and managing director. The fresh directive of 5 February too has been issued to GAIL chairman.

Sources in the ministry said the 16 September letter was in response to GAIL writing to the Oil Secretary asking if in terms of PNGRB Act, 2006, CNG stations are integral part of CGD network or not.

'The issue was examined in the ministry in consultation with the Department of Legal Affairs, Ministry of Law & Justice,' the ministry had said, while passing the directive on CNG stations not coming under purview of PNGRB. The directive had come as a blow to PNGRB which had in October 2013 invited bids for issuing licences for retailing CNG and piped cooking gas in 14 cities including Bengaluru, Pune and Amritsar. Bids were due on 11 February but the regulator has extended the deadline by three months to 12 May. This is the fifth round of CGD bidding, with the previous fourth round that was announced in September 2010, scrapped in November 2011.

PNGRB had invited bids in 2009 for 13 cities in first two rounds. It hasn't been able to award most of the cities offered in third round because of litigations.

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