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PNGRB's gas transmission agreement norms 'bad': HC

The Delhi High Court on Thursday held 'to be bad' the Model Gas Transmission Agreement (GTA) guidelines issued by the Petroleum and Natural Gas Regulatory Board (PNGRB) for fixing and regulating the tariff of gas transport.

A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw said PNGRB can fix and regulate the rates for transporting natural gas only by way of regulations.

It made it clear that the Board in exercise of its adjudicatory functions also cannot pass an order having the effect of determining and regulating transportation tariff.

'We accordingly hold that the PNGRB can exercise power of fixing the transportation rate, of regulating transportation rate and of laying down the transportation tariff and the manner of determining such tariff, only by Regulations.

'We accordingly hold the provisions of the Model GTA guidelines, purporting to fix the transportation rate and/or regulating the transportation rate and/or to lay down the transportation tariff and the manner of determination thereof, though issued by the PNGRB but otherwise than by way of Regulations, to be bad,' it said.

The bench further said 'the Petroleum and Natural Gas Regulatory Board can by making regulations in accordance with the Petroleum and Natural Gas Regulatory BoardAct do what it has sought to do
by framing the Model GTA guidelines and which has now been held to be not permissible.

'Without PNGRB doing so and in the absence of any regulations qua transportation tariff and the manner of determination thereof, PNGRB, in exercise of its adjudicatory functions, also cannot pass an order having the effect of regulating transportation tariff or manner of determination thereof.'

The bench passed the order on the plea of GAIL India Limited which had challenged the Model GTA guidelines issued by the Board as being ultra vires to the Constitution as well as amounting to encroaching on the right of a transporter like GAIL to enter into GTAs on agreed terms.

The Board's guidelines were issued in respect of ship-or-pay charges which a third party shipper has to pay whether it ships the entire contractual quantity of gas, through GAIL's pipeline, or only a portion thereof.

The ship-or-pay charges were fixed at 95 per cent of the tariff for the entire contractual quantity of gas which a shipper is entitled to ship through pipeline of transporter (GAIL) under the GTA, irrespective of the number of units actually shipped by the shipper, the judgement has noted. GAIL had contended that the Board did not have the power to determine the ship-or-pay charges by way of guidelines as these can be fixed only by way of regulations under the PNGRB Act. The company had moved the high court as several shippers, including Lanco Kondapalli Power Ltd, GMR Energy Ltd, GMR Vemagiri Power Generation Ltd and Tata Power Delhi Distribution Ltd, had moved PNGRB seeking enforcement of the guidelines and the Board had been entertaining the complaints.

While allowing GAIL's plea, the bench directed PNGRB to dispose of the complaints made by the shippers in terms of the court's findings.
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