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'PNGRB to fix marketing margin on gas by interacting with entities'

Last Updated: Tuesday, August 14, 2012 - 17:23

New Delhi: After initial hiccups in getting data from companies, the oil regulator PNGRB has now decided to fix marketing margin on sale of natural gas by interacting with the entities, the Oil Ministry said on Tuesday.

"Petroleum and Natural Gas Regulatory Board (PNGRB) has reported that, in the initial stage, it was decided to seek information from entities in order to ascertain details of marketing margin/ other elements included in the selling price of natural gas to consumers during the last three years," the Rajya Sabha was informed on Tuesday.

Minister of State for Petroleum and Natural Gas R P N Singh in a written reply to a question said, "in most of the cases, the information received was inadequate or sketchy".

"It has now been found appropriate to take the process for determination of marketing margin further by interacting with the affected entities," he said, adding PNGRB would begin the process of hearing the entities from September.

Sources said PNGRB has not been able to act on Oil Ministry's December 26 request to determine the quantum of marketing margin chargeable on sale of natural gas, as it did not have powers to regulate the fuel.

PNGRB feels the Ministry's December 26, 2011 reference was under Section 11 (j) of the Petroleum and Natural Gas Regulatory Board Act of 2006.

Section 11 (j) states that the Board will "perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act."

PNGRB feels it can take up the marketing margin only under Section 11 (f) of the Act which states that the Board can "monitor prices and take corrective measures to prevent restrictive trade practice by the entities" in respect of "notified petroleum, petroleum products and natural gas".

Since natural gas has not been notified by the government as a commodity whose prices it can regulate, PNGRB was not competent to regulate marketing margin, the Board felt.

"As PNGRB has been set up as a statutory regulator for downstream activities under the PNGRB Act 2006, the determination of marketing margin has been entrusted to PNGRB under Section 11(j) of the PNGRB Act," Singh told Rajya Sabha.

Reliance Industries charges USD 0.135 per million British thermal unit as marketing margin over-and-above the KG-D6 gas sale price of USD 4.205 per mmBtu. State-owned GAIL charges a USD 0.20 per mmBtu margin on gas produced from the BG Group- operated Panna/Mukta and Tapti (PMT) fields in the Western Offshore and a similar margin on the sale of imported LNG.

While RIL's marketing margin is fixed for the five-year period ending March 31, 2014, the margin charged by GAIL on PMT gas and LNG increases by 5 percent every year.

GAIL also charges a fixed marketing margin of USD 0.11 per mmBtu on selling gas that state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) produce from domestic fields.


First Published: Tuesday, August 14, 2012 - 17:23
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