New Delhi: The Petroleum and Natural Gas Regulatory Board (PNGRB) has said the recent regulation for liquefied natural gas (LNG) terminals will help achieve “well-coordinated, transparent, and demand-driven gas market development” in the country.
Last month, PNGRB introduced regulations mandating that companies intending to set up a new LNG terminal or expand capacity must register with the regulator, which will issue a registration certificate only after reviewing their detailed feasibility report, business plan, and evacuation strategy.
Several companies, including existing LNG terminal operators, had opposed PNGRB’s move when the draft regulation was being discussed last year. Multiple company executives told ET that the new regulation was an “overreach,” and it’s unreasonable to assume that a regulator would know better than a company how to deploy capital.
Defending its decision to regulate LNG terminals, PNGRB said on Monday that most of India’s LNG terminals are deeply underutilized, which was “a major concern for the financials of the companies,” and expressed hope that the new regulations “will ensure better utilization by ensuring the necessary linkage for existing and proposed terminals.”
LNG terminals are usually connected to a pipeline for evacuation. “Creation of such pipelines with low utilisation levels resulted in an un-necessary tariff burden which is ultimately borne by the customers,” PNGRB said.
The regulation also mandates companies to disclose terminal charges on their websites. “LNG terminals often lack transparency and their re-gasification charges, truck loading charges and boil-off gas (BOG) charges are not consistently disclosed as is the practice for natural gas pipelines. This leads to opaque practices and lack of clarity to the prospective customers,” the regulator said, adding that it didn’t intend to regulate tariff.
