Wednesday, July 1, 2015

Petroleum and Natural Gas Regulatory Board (PNGRB), has no power to regulate the tariff

The Supreme Court on Wednesday ruled that the gas distribution regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), has no power to regulate the tariff at which gas is to be sold by entities, such as Indraprastha Gas Ltd (IGL), to the consumers.

Quashing the regulations framed by the PNGRB to determine network tariff for city or local gas distribution network as well as compression charge for CNG, the top court held that the PNGRB Act did not accord to the regulator authority to fix tariff.

A bench led by Justice Dipak Misra noted that the function of the Board is of regulating the inter-se relationship of entities under the Act and not to regulate the relationship between the entities and the consumers.

It rejected a plea by the PNGRB to give a purposive interpretation to the Act in the consumers’ interest and let it regulate the tariff. The court said that the intent of the legislature was clear in not giving this power to the Board and a court can not now frame laws in the guise of an interpretation.

The bench clarified that the PNGRB’s power was confined to provide by regulations the transportation tariff for common carrier or contract carrier or city or local natural gas distribution network and the manner of distribution of such tariffs.

With this order, the bench also nixed the Board’s order in 2012, asking the IGL to to cut prices of piped cooking gas and automobile CNG in the national capital and to refund excess amount charged from consumers since 2008. This order had said the actual network tariff and compression charges that IGL could levy in the capital was Rs 38.58 and Rs 2.75 against the Rs 104.65 and Rs 6.66 respectively levied by the company.

The IGL had challenged it in the Delhi High Court, which said that PNGRB was not empowered to fix maximum retail price of gas and that it could monitor prices only if the marketers of gas in a particular area have formed a cartel or are indulging in any other restrictive trade practices. The Board appealed against this in the apex court, which affirmed the High Court order and said that PNGRB cannot provide for regulations which are not permissible under the Act.

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