Petroleum and Natural Gas Regulatory Board has no right to fix price of Natural Gas; SC [Read the Judgment]

The Supreme Court of India today dismissed the appeal (Petroleum and Natural Gas Regulatory Board vs. Indraprastha Gas Limited & Ors. CIVIL APPEAL NO.4910 OF 2015) preferred by Petroleum and Natural Gas Regulatory Board against a Delhi High Court decision by which the regulator’s order of fixing the prices of CNG and PNG in Delhi and adjoining areas was rescinded.

A bench headed by Justice Dipak Misra rejected the appeal of PNGRB that it had the right to determine prices of compressed natural gas (CNG) and piped natural gas (PNG).On June 1, 2012, the High Court had set aside the April 9, 2012 order of PNGRB, which had reduced the network tariff and compression charges for CNG distributed by Indraprastha Gas Limited (IGL) in New Delhi and adjoining areas, calling it as "illegal".The High Court had said 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 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," the court had told the PNGRB.

It is noteworthy that the plea was previously filed by IGL arguing 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.PNGRB, in its order, had asked IGL to cut down its network tariff by 63% 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 per cent to Rs 38.58 per Million British Thermal Units (mmBtu) as against Rs 104.05 per mmBtu sought by the company.

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

Read the Judgment here.