New Delhi: The oil ministry is planning to bring oil companies’ captive pipelines under the ambit of the Petroleum and Natural Gas Regulatory Board (PNGRB), a move that will help the regulator monitor these pipelines and eventually convert them into common carriers where needed.
The ministry plans to do this by amending the PNGRB Act.
“There is a certain ambiguity on dedicated pipelines today, which the amendment will clarify,” an official said, adding that the aim is to get companies to register their dedicated pipelines with the regulator and follow common safety protocols. “Companies won’t be required to seek authorisation from the PNGRB for the existing dedicated pipelines.”
The law doesn’t recognise what oil companies call “captive” pipelines and instead uses the term “dedicated” for pipelines that are used solely by companies for their own operations. Based on usage, other pipelines are categorised as either common carrier or contract carrier.
Oil companies that built such “captive” or “dedicated” pipelines years ago have resisted PNGRB’s attempts to regulate them or turn them into common carriers. Executives at state-run oil companies remain wary of permitting access to captive pipelines, fearing it could lead to a loss of market share for state-owned firms.
The law already permits the PNGRB to declare a dedicated pipeline a common carrier or contract carrier, the official said.
PNGRB wrote to Indian Oil, BPCL and HPCL in December 2022, stating that their dedicated pipelines need to be regulated to protect consumer interests.
“The intent of bringing such pipelines under the ambit of PNGRB is to protect the interest of consumers by fostering fair trade and competition amongst the entities by determining transportation tariff, providing non-discriminatory third-party access and monitoring of compliance of technical and safety standards,” PNGRB wrote to the state oil marketing companies in 2022.
Access to transport infrastructure and storage is key to dominance in the fuel market.
Pipelines offer a far cheaper mode of fuel transport than railways. Private refiners currently hold about a 10% share of the petrol, diesel and jet fuel market in the country. With greater access to state firms’ pipelines, they could further increase their market share.
