PNGRB puts Reliance on notice on gas pipeline

Oil regulator PNGRB has virtually put Reliance Industries Ltd (RIL) on notice by inviting bids for sections of two natural gas pipelines that were previously awarded to the Mukesh Ambani-run firm.

The Petroleum and Natural Gas Regulatory Board (PNGRB) this month invited bids for two separate pipeline lengths down south, even though the question whether the regulator is empowered to give firms the authorisation to lay pipelines is to be decided by the Supreme Court.

Nevertheless, the PNGRB on December 15 invited Expression of Interest from parties interested in taking capacity in a pipeline from Chennai (in Tamil Nadu) to Nellore (in Andhra Pradesh) that Andhra Pradesh Gas Infrastructure Corp (APGIC) wants to lay, according to an advertisement by the Board.

This section is part of the 600-km Kakinada (in Andhra Pradesh) to Chennai pipeline that RIL was authorised to lay to transport natural gas from its eastern offshore KG-D6 fields.

It has similarly invited bids for a line from Kakinada to Visakhapatnam and Srikakulam in Andhra Pradesh, which form part of RIL's under-implementation 1,100-km Kakinada to Basudevpur (in Orissa) pipeline.

A PNGRB official said RIL has been slow in implementing the two as well as the 670-km Chennai to Tuticorin pipeline and so the board invited EoI on APGIC's proposal to lay the sections.

RIL on the other hand has written to the PNGRB saying it has already completed acquisition of right-of-user (ROU) for the pipelines and the delay, if any, in the implementation was due to the uncertainty over who the government is going to allocate gas from KG-D6 fields.

The company says it does not have freedom to market the gas and a pipeline will become infructuous if the gas was allocated to regions other than where the line has been laid.

PNGRB official could not say why the Board was going ahead with inviting bids when the Supreme Court has not yet clearly said if it has the power to issue authorisations to any company to lay pipelines or implement city gas projects.

The court has posted the matter for hearing in August 2011. The government has not yet notified Section 16 of the PNGRB Act that explicitly gives the board powers to issue such authorisations.

RIL was authorised to lay the three pipelines by the government before the board actually came into being.