ARTICLE DETAILS
- Date: January 18, 2021
- Version: 1.0
- Keywords: PNGRB, CGD, City Gas Distribution Network, Access Code, Standardized Access Arrangement
- Jurisdiction: India
- Domain: Natural Gas | Downstream
LEGISLATION REFERRED
- Petroleum and Natural Gas Regulatory Board Act, 2006
- Petroleum and Natural Gas Regulatory Board (Access Code for City or Local Natural Gas Distribution Networks) Regulations, 2020
OVERVIEW
The Petroleum and Natural Gas Regulatory Board (PNGRB) notified the Access Code for City or Local Natural Gas Distribution Networks, 2020 with the objective of facilitating fair and non-discriminatory access to City Gas Distribution (CGD) Networks.
The regulations establish a framework through which third-party shippers may access CGD infrastructure within an Authorized Area and transport natural gas through existing networks on transparent and non-discriminatory terms.
The Access Code is built upon two fundamental pillars:
- Capacity Booking
- Standardized Access Arrangement
KEY HIGHLIGHTS OF THE ACCESS CODE
Capacity Declaration
An authorised CGD entity is required to determine and declare the available capacities across its network, including:
- Entry Point Capacity
- Exit Point Capacity
- CNG Exit Point Capacity
- DPRS Capacity for PNG
- Mother and Online Station Capacity for CNG
Such information must be published within 90 days of declaration of the CGD Network as a common carrier or contract carrier.
Capacity Booking
- Authorised entities must publish capacity booking information within 21 days of declaration of the network as a common carrier or contract carrier.
- Similar publication requirements apply whenever additional capacity becomes available.
- Interested shippers must submit booking requests within 90 days of publication.
- Capacity allocation must be finalized within 30 days after completion of the booking period.
Third-Party Access to CNG and L-CNG Stations
Authorised entities operating CGD Networks declared as common carriers are required to provide access to third-party shippers on a non-discriminatory basis.
Existing CNG and L-CNG stations operated by dealers, franchisees or petroleum retailers associated with the authorised entity are excluded from the definition of third-party shippers for access purposes.
Where existing compression facilities are insufficient to meet third-party requirements, the shipper may request installation of additional compression facilities subject to technical feasibility.
If installation is not technically feasible, the authorised entity must provide written reasons within 45 days of receiving the request.
OBLIGATIONS OF THE AUTHORISED ENTITY
- Comply with all applicable regulations and guidelines issued by PNGRB.
- Receive gas at agreed entry points and deliver gas at agreed exit points.
- Manage and operate the CGD Network efficiently and safely.
- Act as the supplier of last resort for domestic consumers in the event of shipper default.
- Ensure overall system management and network integrity.
OBLIGATIONS OF THE SHIPPER
- Comply with all applicable regulations before gas delivery to the authorised entity and after gas receipt from the authorised entity.
- Deliver gas at agreed entry points and receive gas at agreed exit points.
- Ensure gas quality conforms to prescribed standards.
- Pay all applicable charges and provide necessary guarantees or security arrangements.
- Remain responsible for billing and collection from its customers.
GAS QUALITY REQUIREMENTS
Authorised entities are required to specify threshold limits for gas quality on a non-discriminatory basis, including:
- Pressure
- Temperature
- Calorific Value
- Other prescribed gas composition parameters
If gas supplied by a shipper does not meet the prescribed specifications, the authorised entity may:
- Refuse acceptance of the gas; or
- Accept the gas and recover applicable service costs as specified under the access arrangement.
CHARGES PAYABLE BY SHIPPERS
Shippers are required to pay various charges for use of the CGD Network, including:
- Transportation Charges for CGD
- Transportation Charges for CNG
- Overrun Charges
- System Imbalance Charges
- Off-Specification Gas Charges
- Applicable Taxes and Duties
- Ship-or-Pay and Transport-or-Pay Charges (where applicable)
- Technical Upgradation Charges (if specifically requested)
- Research and Development Charges (if specifically requested)
- Any additional charges approved by PNGRB
Overrun and Imbalance Charges
- No overrun charges apply for quantities up to 5% above scheduled quantities.
- No imbalance charges apply for cumulative positive or negative imbalances up to 5% of contracted quantities.
- Charges beyond prescribed thresholds must be transparent, reasonable and non-discriminatory.
Escrow Account Mechanism
PNGRB is required to establish and maintain an escrow account into which imbalance and overrun charges recovered by authorised entities are deposited.
Authorised entities may seek reimbursement from the escrow account for costs incurred in managing shipper-created imbalances, subject to approval by the Board.
SYSTEM USE GAS, LUAG AND LINE PACK
- System Use Gas (SUG) shall be absorbed by the authorised entity.
- Lost and Unaccounted for Gas (LUAG) shall be absorbed by the authorised entity.
- Line Pack (LP) shall be absorbed by the authorised entity.
- No liability for SUG, LUAG or LP may be passed on to shippers.
OPERATING PROCEDURES AND EMERGENCIES
The Access Arrangement must include operating procedures covering both routine operations and emergency situations.
Emergencies may include:
- Gas leakage or suspected leakage.
- Threats to network safety.
- Risks affecting safe transportation of gas.
- Unsafe pressure or gas quality conditions.
- Any other circumstance reasonably believed to constitute an emergency.
CONFIDENTIALITY OF INFORMATION
Both shippers and authorised entities are obligated to maintain confidentiality of all information exchanged in connection with access arrangements and operation of the CGD Network.
Confidential information includes documentation, data, submissions, comments, communications and operational information disclosed under the regulations.
STANDARDIZED ACCESS ARRANGEMENT
Capacity bookings are to be finalized through a standardized Access Arrangement that complies with Schedule-I of the Regulations.
The arrangement must include provisions relating to:
- Services provided by the authorised entity.
- Know Your Shipper (KYS) requirements.
- Obligations of both parties.
- Facilities at entry and exit points.
- Metering and measurement procedures.
- Gas quality standards.
- Scheduling and allocation processes.
- Overrun and balancing mechanisms.
- Charges and payment obligations.
- Communication protocols.
- Curtailment procedures.
- Force majeure and emergency management provisions.
The standard format of the Access Arrangement must be published on the authorised entity’s website within 45 days of declaration of its CGD Network as a common carrier or contract carrier.
The Access Code establishes a transparent and non-discriminatory framework for third-party participation in City Gas Distribution Networks, thereby promoting competition, efficient utilization of infrastructure and greater access to natural gas markets in India.
