In a significant order that is bound to have widespread implications, the Petroleum and Natural Gas Regulatory Board (PNGRB) has slashed the network tariff and the CNG compression charge billed by Indraprastha Gas Ltd. (IGL) on sale of piped natural gas (PNG) and compressed natural gas (CNG) in Delhi. The oil regulator has also asked IGL to refund the excess amount charged from consumers since 2008.

Reacting to the PNGRB order, IGL, which has been on constant warpath with the oil regulator questioning its jurisdiction to decide on such matters, said it had been denied the principle of natural justice and had approach the Delhi High Court. challenging the constitutionality and legality of the powers of the PNGRB to fix the tariff.

“IGL would be answering any questions on specifics of the case only after the IGL's matter comes up for hearing in the High Court,'' it said in a statement here.

The PNGRB order, dated April 9, has fixed the IGL's pipeline network transportation tariff at Rs.38.58 per million metric British thermal unit (mmBtu) as against Rs.104.05 per mmBtu proposed by the company. It also cut the compression prices for CNG to Rs.2.75 a kg from Rs.6.66 a kg submitted by IGL. The new charges would be applicable from April 1, 2008.

It asked IGL to refund the excessive tariff billed to consumers on selling of PNG to households and CNG to automobiles in Delhi since 2008. IGL, which is likely to be impacted immensely by the order in terms of financial dues to the consumers, said it was not going to implement the order immediately.

“We are not clear how they (PNGRB) have calculated this tariff. We do not know the assumptions they have made. The company was not given a fair chance to plead its case before the PNGRB passed its order. There are differences (with the PNGRB) on many counts... the gas volumes, capacity utilisation and the pipeline network (taken into account for calculating the tariff),'' IGL Managing Director M. Ravindran said.

The shares of IGL plunged as much as 51 per cent to Rs.170 before closing at Rs.229.80 on the Bombay Stock Exchange

According to the decision of the PNGRB, “While the PNGRB (Determination of Network Tariff for City or Local Natural Gas Distribution Networks and Compression Charge for CNG) Regulations, 2008, were notified on March 19, 2008, for the purpose of ease in calculations, the applicable network tariff and the compression charge for CNG determined by the board shall be applicable from April 1, 2008. Accordingly, the Network tariff and the compression charge for CNG in respect of the Delhi PNG Network of IGL shall be Rs.35.58 mmBtu and Rs.2.75 a kg, respectively, with effect from April 1, 2008.''

Further, it stated: “As per the provisions of the PNGRB (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, IGL shall recover the network tariff and the compression charge for CNG separately through an invoice without any premium or discount on a non-discriminatory basis. Further, in conformity with the decision conveyed vide letter dated May 23, 2011, mentioned in para 2.3 above, the difference between the network tariff and the compression charge for CONG submitted by IGl and that determined by the board as given in the table above would be reflected through appropriate reduction in selling prices from the date of issuance of this order. The modalities and time frame for refund of differential network tariff and the compression charge for CNG for the period from April 1, 2008 till the date of issuance of this order shall be decided and advised by the board subsequently.''

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