Policy
India, Iran Showdown Unlikely Over Farzad B Contract
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Rosneft May Outsmart Indian PSUs By Doubling Refinery Capacity
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Natural Gas Prices Likely To Remain Relatively Subdued
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Clear Logic Yet To Emerge From Creation Of Mega Oil PSU
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Intent To Co-Operate With Bangladesh In Energy Positive
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Regulation
ONGC Sees Production Potential In HP/HT Onshore, Offshore
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Government Lays Down Conditions For PSC Extension
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Discoverer Gets Nothing For Discovering Oil & Gas Fields?
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Higher Naphtha Exports Hurt Refineries, Imports Continue
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Alternative Energy / Fuel
Biodiesel Industry Seeks Lower Taxes
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New Projects
Fresh MoU for Barmer Refinery Signed
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Greka Wins ONGC CBM Drilling Contract
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CIL-led Consortium To Invest Rs 32.40 Billion In Ravva Field
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Punj Lloyd Arm Bags Rs 3120-Mn Saudi Arabian Order
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Essar Wins Bid For LNG Terminal At Haldia Port
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Market Watch
CBM Producers Get Pricing, Marketing Freedom
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Petrol, Diesel Prices To Change Daily From 1 May
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Companies
L&T Hydrocarbon Engineering Limited
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Emerson Donates Reservoir Characterization Software To Indian Universities
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Atlas Copco Opens New Unit In Hyderabad
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OIL Raises $500 Mn In Overseas Bonds
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RIL Gets Up To $75m Loan From EDC
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Press Release [FREE Access]
Petro Intelligence » Regulatory Board In Its Death Throes

By R. Sasankan

“Ah Love! could thou and I with Fate conspire
To grasp this sorry Scheme of Things entire,
Would not we shatter it to bits -- and then
Re-mould it nearer to the Heart's Desire!”
– Omar Khayyam, Persian poet

Narendra ModiKarl Marx visualised a stage where the state would simply wither away. This was the ultimate phase of his ideal socialist state. But there is a massive gap between precept and practice – and the so-called practitioners of his creed have proved Marx wrong.

Instead of the state withering or weakening its hold, they have become Leviathans – not much different from Thomas Hobbes’ social contract theory which posited the idea that civil war could only be avoided by an absolute sovereign ruling a Commonwealth that he termed the Leviathan in his book that bore the same title. Institutions that were once perceived to be useful to society have been either undermined or dismantled, especially in countries like Russia and China which experimented with Communism.

Regulatory bodies underpin the rule of law in most countries. All industrialised economies, except Russia and China, have institutionalised regulatory bodies. India started the process of setting up regulatory bodies about two decades ago but went about creating them in the wrong way. The government ensured that these regulatory bodies did not become so powerful that their writ would undermine the powers of the bureaucracy and the politicians. Thus, regulatory bodies became a parking lot for superannuated bureaucrDharmendra Pradhanats. This coupled with the traditional knack of picking up the wrong people for responsible jobs prevented these regulatory bodies from having the desired impact.

The cash-rich petroleum sector has been doing reasonably well notwithstanding the interference of the political party in power. The petroleum sector was almost totally dominated by the public sector companies since the days of Mrs Indira Gandhi but, with the entry of companies such as Reliance and Essar in the downstream sector and foreign companies in the E&P, the government came under pressure to set up regulators. The bureaucracy blocked it for the upstream sector by manipulating the creation of a technical body called the Directorate General of Hydrocarbons (DGH) which royally messed things up. DGH, which is part of the Ministry of PetrolL Mansingheum and Natural Gas, only has an advisory role. But even in that limited role, it has managed to play havoc in the E&P sector.

The government looked sincere in setting up a regulator for the downstream sector when it enacted an Act to create a Petroleum and Natural Gas Regulatory Board (PNGRB). But it again bungled while drafting the provisions of the Act and selecting the team. The PNGRB is now in its death throes. In the absence of a miracle, its funeral can be expected very shortly.

None has criticised the Modi government for the present state of the PNGRB and rightly so. The PNGRB never played a useful role in its decade-long existence. Almost all its decisions that were challenged in courts of law have been struck down. In desperation, the Board had advertised for consultants to redraft the regulations but it is not in a position to award the job to anyone.

Surprisingly, the Board which lacks a quorum has protested against the government move to permit GAIL to set up CNG units along the Jagdishpur-Haldia gas pipeline route. There is merit in its protest becaV.K. Sibaluse under the PNGRB Act, it is the only one empowered to authorise gas pipelines and CGD units. Even those CGD units and pipelines created before PNGRB was established were duty bound to seek regularisation from PNGRB.

The Modi government has not commented on the state of affairs in PNGRB. Not has it reacted to the regulator’s protest against the blanket permission given to GAIL to set up CGD units. The PNGRB has been without a chairman for the last two years. Of its total strength of five members, it is has only one now. The government probably believes that the country can do without a downstream regulator, a perception shared by many within the industry. The government’s silence has frustrated the ambitions of quite a few superannuated bureaucrats who have been lobbying for the post of chairman.

B. MohantyBut the question is why the government is allowing the space occupied by PNGRB to be wasted. All its employees are on deputation from PSUs and they will have no problem in going back. The government can save on rent for the space it now occupies by shifting the only surviving member to a room elsewhere. He is a genuine expert in petroleum matters and his talents can be utilised during the remaining period of his tenure elsewhere.

The government will certainly come under pressure to create an effective regulator if its plan to set up a mega oil behemoth by merging all the oil and gas companies becomes a reality. On present reckoning, this cannot happen in the next two or three years. As and when it happens, the PNGRB Act itself will have to be changed drastically to create an effective regulatory body. Perhaps, the Modi government is waiting for such an opportunity to recast and remould PNGRB. The strategy is not to create sound and fury by smashing it to bits but to allow its slow death so that a powerful regulator can be created later. In Modi’s scheme, the regulator ought not to be reduced to a weak body of retired bandicoots.



To download the latest issue 'Volume 24 Issue 2 - April 25th 2017', click here
Petro Intelligence [FREE Access]
Sarraf Awarded A New Bailiwick. Why Now?
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Tit-for-tat Threat Looms Over Iran Gas Deals
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Iran Uses Chennai Petroleum As Bargaining Chip?
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Fouling The Air: The Pet Coke Story
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Foreign Investment
Aramco Seeks Stake In Proposed New Coastal Refinery?
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Overseas Investment
Sri Lanka, India To Jointly Run Trincomalee Oil Facility
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Gas Scene
Domestic Natural Gas Scene In February 2017
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LNG Imports FY 2011 -12 to 2016-17
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Natural Gas Demand Projections 2017-18 To 2021-22
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PNG Status
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Coal Bed Methane (CBM) gas development in India update
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India’s Installed Power Generation Capacity
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LNG Developments
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Update: CGD Factsheet, CNG Stations & Vehicles
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Natural Gas Availability, Sectoral Demand and Consumption (December 2016)
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Update: Price of Domestic Gas
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ONGC’s Shale Exploration in FY 2016
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Gas: Production, consumption and imports - an update
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Gas pipeline under execution / construction as on 30th September, 2016
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ONGC: Asset-wise break up of gas flared (April 2015 - March 2016)
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Update: Capacity Utilisation of Gas Pipeline Network as on 30th September 2016
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Update: Regasification infrastructure
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Expansion of Existing Refineries
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Exploratory Inputs by ONGC and OIL as on 1st January, 2017
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Exploratory Inputs since inception under PSC Regime
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Basin-wise PEL & PML with Pvt./ Joint Venture Companies as on 1st January, 2017
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Basin-wise operative PEL & PML under Nomination Regime as on 1st January, 2017
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Refinery Capacity & Refinery Crude Throughput in recent years
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Power deficit: Region-wise position for February, 2017
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Investment under NELP
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Blocks awarded under Production Sharing Regime
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Appraised Area of Indian Sedimentary Basins
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Estimated Hydrocarbon Resources in India
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Sedimentary Basins in India
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Year wise FDI inflows under P&NG Sector
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Operator-wise Hydrocarbon Discoveries under PSC Regime
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LPG Demand Surges As Overall Petroleum Consumption Dips In January
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Tenders [FREE Access]
Cairn India Limited
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Cairn India Limited
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