CNG rate cut termed illegal by HC

CNG rate cut termed illegal by HC

The Delhi HC has poured cold water over rejoicing consumers of CNG.

The Delhi High Court today quashed the Petroleum and Natural Gas Regulatory Board (PNGRB) order,which had slashed with retrospective effect the network tariff and compression rate for CNG distributed by Indraprashta Gas Limited (IGL) in Delhi and adjoining areas.

A bench of Acting Chief Justice A K Sikri and Justice Rajiv Sahai Endlaw set aside the April 9 order of the oil regulator terming it as “Illegal” and saying that the PNGRB was not “empowered” to fix or regulate the maximum retail price (MRP) at which the gas is to be sold by retailers.

“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,” the court ruled.

The division bench made it clear that the regulatory board was not empowered to fix any component of ‘network tariff’ and ‘compression charges’ for compressed natural gas as contended by the IGL.


“We further hold that the board is also not empowered to fix any component of network tariff or compression charge for an entity such as the petitioner (IGL),having its own distribution network. The provision of the regulations,so far as construed by the board to be so empowering it,is held to be bad/illegal,” court said.

The court’s order came on a plea 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 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.

The regulator had ordered the company to reduce its network tariff by 63 percent to Rs 38.58 per Million British Thermal Units (mmBtu) as against Rs 104.05 per mmBtu sought by the company.

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