Order slashing CNG prices quashed by High Court

Ruling that the Petroleum and Natural Gas Regulatory Board (PNGRB) has no power to determine the maximum retail price of CNG,the Delhi High Court on Friday set aside its April 9 order which had slashed the network tariff and compression charges for CNG distributed by the Indraprastha Gas Limited (IGL) in Delhi and adjoining areas.

Written by Express News Service | New Delhi | Published: June 2, 2012 12:48 am

Ruling that the Petroleum and Natural Gas Regulatory Board (PNGRB) has no power to determine the maximum retail price of CNG,the Delhi High Court on Friday set aside its April 9 order which had slashed the network tariff and compression charges for CNG distributed by the Indraprastha Gas Limited (IGL) in Delhi and adjoining areas.

“PNGRB is not empowered to fix or regulate the maximum retail price with respect to the gas which is to be sold by entities as the petitioner (IGL) to consumers. It is further held that the Board is not empowered to fix any component of the network tariff or compression charges for such entities which have their own distinct network,” said a bench of Acting Chief Justice A K Sikri and Justice Rajiv Sahai Endlaw.

The court noted that the PNGRB Act had no explicit provision enabling the Board to regulate the price to be charged by a gas utility like IGL from its consumers.

Function of the Board,the court said,was of regulating the inter-se relationship of the entities under the Act and not to regulate or control the relationship between these entities and consumers. Price fixation can be done only in order to prohibit the restrictive trade practices and not otherwise,the court said.

“The order dated April 9,2012,to the extent of fixing the maximum retail price or requiring the petitioner (IGL) to disclose the network tariff and the compression charges to its consumers is struck down/quashed,” said the court.

The court’s order came on a petition by the IGL,which had contended that the PNGRB did not give it a hearing and calculated the tariff on the basis of the 2008 price levels for various inputs and charges. IGL,the sole supplier of compressed natural gas in Delhi /NCR had pleaded against the regulatory board’s decision to regulate its network tariff and selling price.

The board,in its order,had asked IGL to cut down its network tariff by 63 per cent Rs 38.58 per Million British Thermal Units (mmBtu) as against Rs 104.05 per mmBtu sought by the company,with retrospective effect. It had also asked the company to refund the difference to its customers for the period from April 1,2008 till the date of issuance of order for CNG and piped gas.

It had also cut compression charge for CNG by 59 per cent to Rs 2.75 per kg from Rs 6.66 per kg proposed by the company.

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