Access Code for City or Local Natural Gas Distribution Networks Regulations R1

Petroleum and Natural Gas Regulatory Board (Access Code for City or Local Natural Gas Distribution Networks) Regulations, 2020 at a glance

Date | VersionJanuary 18, 2021 | 1.0
Keywords‘PNGRB’, ‘CGD’,’ City or Local Natural Gas Distribution Networks’, ‘Access Code’, ‘Standardized Access Agreement’
List of Legislation Referredi. Petroleum and Natural Gas Regulatory Board Act, 2006

ii. Petroleum and Natural Gas Regulatory Board (Access Code for City or Local Natural Gas Distribution Networks) Regulations, 2020

JurisdictionIndia
DomainNatural Gas| Downstream
  • In a nutshell:
    1. The Access Code seeks to enable access to Shipper on non-discriminatory basis to a city or local natural gas distribution network (‘CGD Network’) in an Authorized Area.
    2. Capacity booking and standardized access arrangement constitute the two pillars of the Access Code.
  • Key heads:
  • Capacity Declaration
    1. Authorised entity to determine and declare on its website data points with respect to the entry point capacity, the exit point capacity, the CNG exit point capacity for open access at all entry points and exit points and the capacity at DPRS level for PNG and capacity at mother and online stations (Cascade filling capacity) for CNG within 90 days of declaration of its CGD network as common carrier or contract carrier.
  • Capacity Booking
    1. Authorised entity to publish information for seeking capacity booking in CGD Network within 21 days of declaration of its CGD Network as common carrier or contract carrier.
    2. Similar action within 21 days as and when extra capacity is available in its CGD network.
  • Interested shippers to submit their offers for booking capacity within 90 days from the date of publication.
  • Capacity booking to be finalised by the authorised entity within 30 days from the end of the 90-day period.
  • Access to third party shipper CNG or L-CNG stations
    1. An authorised entity whose CGD network has been declared as a common carrier, shall provide access to the third party shipper for CNG or L-CNG station within the authorised area of its CGD network on nondiscriminatory basis.

CNG or L-CNG stations, existing as on the Date of coming into force run by dealers and franchises of authorised entities (including CNG or L-CNG stations run by companies engaged in retailing of liquid petroleum products on their retail outlets) not to be considered as third party shipper for the purpose of allowing access in CNG or LCNG stations.

  • If the existing compressor is unable to meet the requirements of the third-party shipper within the limits of common carrier capacity, then such third party shipper may request the authorised CGD entity to install additional compression facilities to meet the requirements subject to technical feasibility.
  • In case the authorised entity is unable to install the additional compression facilities due to technical constraints, authorised CGD entity shall inform the third-party shipper in writing along with the reasons within a period of 45 days from the date of request.
  • Obligations of Authorised Entity and Shipper
  • Authorised Entity shall:
  • comply with all the applicable regulations and guidelines issued by the Board from time to time from receipt of gas to the delivery point.
  • receive the gas from the shipper at the agreed entry point, transport the gas through its CGD network and shall deliver the gas at the agreed exit point.
  • be responsible for the overall management of its CGD network and related services.
  • act as supplier of the last resort for the domestic customers in case of any default by the shipper.
  • Shipper shall:
  • comply with all the applicable regulations for the CGD network before the gas receipt by the authorised entity and after gas is delivered to the shipper.
  • deliver gas at the agreed entry point and receive the gas at the agreed exit point.
  • ensure that the gas delivered by it at the entry point conforms to the parameters specified in the Regulation [Ref: Regulation 8]
  • pay all dues and provide such guarantee, surety and security to the authorised entity as may reasonably be required to meet its commercial obligations under the access arrangement.
  • be responsible for billing and collection of dues from its customers.
  • Gas Parameter
  • The authorised entity to specify the threshold limits for gas parameters at the entry pointon a non-discriminatory basis, including among other things:
  • the acceptable ranges of pressure,
  • temperature and
  • calorific value and the acceptable threshold limits for other elements in gas.
  • If the gas delivered by the shipper at the entry points does not meet the requirements of gas parameters; the authorised entity may:
  • refuse to accept it; or
  • accept it and charge on a non-discriminatory basis, a cost of service from the shipper, as per the access arrangement.
  • Charges

The Shipper is required to pay the authorized entity the following charges as for use of the CGD Network:

  • transportation rate for CGD‖ in accordance with Petroleum and Natural Gas Regulatory Board (Determination of Transportation Rate for CGD and Transportation Rate for CNG) Regulations, 2020;
  • transportation rate for CNG in accordance with Petroleum and Natural Gas Regulatory Board (Determination of Transportation Rate for CGD and Transportation Rate for CNG) Regulations, 2020;
  • overrun charges, if applicable-
  • The methodology for calculation of the overrun quantity for a shipper shall be specified in the access arrangement on a non-discriminatory manner.
  • No overrun charges payable for overruns up to five percent of the scheduled quantity.
  • Overrun charges shall be reasonable, transparent and non-discriminatory and shall be specified in the access arrangement. Overrun charges payable by the shipper in respect of a day shall be equal to the sum of the overrun charges payable in respect of each entry point on that day.
    1. system imbalance charges, if applicable;
  • Shipper shall not have to pay any imbalance charges up to a cumulative positive or negative imbalance of five percent of sum of MDQ at all the entry points.
  • Authorised entity to notify imbalance quantity to shipper on daily basis.
  • Imbalance charge for cumulative positive imbalance and cumulative negative imbalance in excess of theselimits shall be reasonable, transparent and non-discriminatory.
  • Maintenance of escrow account:
  • Board to establish and maintain an escrow account from the date of the commencement of these regulations. All charges received by the authorised entity on account of imbalances and overruns to be credited in the escrow account.
  • The authorised entity shall raise a separate invoice towards imbalance and overrun charges, including applicable taxes and levies and make all reasonable efforts for recovering the imbalance and overruns charges from the shipper within the period it allows shipper to pay its transportation charges.
  • The authorised to deposit such charges received from the shipper (excluding taxes and levies) into the escrow account within a period of fifteen days from the end of the calendar quarter without any deduction.
  • The authorised entity shall submit to the Board month-wise, Geographical Area-wise and shipper-wise details of such charges as are recoverable from each shipper, amounts received from the shippers and the amounts due from shippers and its reconciliation with the amount deposited, quarterly within a period of 60 days from the end of each quarter.
  • The authorised entity may claim from the escrow account maintained by the Board the amounts incurred by it towards its contractual obligations with reference to supply or pay and system management of the CGD network due to such imbalances created by the shippers upto the amount deposited by him in the escrow account.
  • The Board to consider such claims on merits and the Board shall communicate the amount of claim approved to the authorised entity within 60 days from receipt of complete information.
    1. off-spec gas charges, if applicable, as agreed in access arrangement;
    2. applicable taxes and duties;
  • any other charges in the access arrangement such asship or pay; transport or pay; technical upgradation of system, if such service has been specifically requested by shipper; and R&D, if such service has been specifically requested by shipper;
  • any other charges as approved by the Board from time to time.
  • System Use Gas (SUG), Lost and Unaccounted for Gas (LUAG) and Line Pack (LP):
    1. SUG and LUAG: Authorised entity to absorb SUG and LUAG and liability shall not pass on the liability to the shipper.
    2. LP: Authorised entity to absorb LP and liability shall not pass on the liability to the shipper
  • Operating Procedures and emergencies
    1. The operating procedures during regular operations as well as in the event of an ‘Emergency’ to be included in the access arrangement.
    2. An emergency may exist—
  • by reason of a leakage, or a suspected leakage, of gas; or
  • in following circumstances, namely—
  • the safety of the network is at risk;
  • the safe conveyance of gas through the network is at risk;
  • gas conveyed by the network is at such a pressure or of such a quality as to constitute, when supplied to the customer‘s premises, a danger to life or property; or
  • any other circumstances reasonably believed by the authorised entity to constitute an emergency which, for the avoidance of doubt, may include circumstances upstream of an entry point, and, where the context requires, a reference to an emergency includes the event or circumstance which may give rise to such emergency.
  • Confidentiality of Information
    1. Both shippers and authorized entity obligated to maintain confidentiality of all ‘information’.
    2. Information means all documentation, information, data, submissions, comments, etc. disclosed, delivered or exchanged by or between any entity (authorised entity, shipper or any other party) either in connection with or in consequence of the requirements of these regulations
  • Access Arrangement

The standardised access arrangement with shippers shall include provision under the following heads:

  • Services to be provided by the authorized entity to the shipper;
  • “Know Your Shipper” submission to authorised entity and guarantees;
  • Obligations of shipper and authorised entity;
  • Facilities at the entry point and exit point;
  • Service obligations:
  • Metering
  • Alternative ownership of measuring equipment
  • Validation and calibration
  • Operating and maintenance of the measuring equipment
    1. Gas Quality:
  • Gas specification and pressure
  • Off-specification gas
    • System integrity, discipline and grid management
  • Nomination
  • Allocation and scheduling:
  • Allocation process
  • Scheduling Process
  • Allocation and scheduling data
  • Calculation of Scheduled quantity
  • Over-runs:
  • Overruns philosophy and principles
  • Unauthorised overrun charges
  • Balancing:
  • Balancing principles
  • Imbalance charges
  • Imbalance rate
  • Variance charges
    • Statutory levies
  • Other charges
  • Invoicing and payment
  • Communication:
    1. Introduction
    2. Gas management system
  • Curtailment
    1. Introduction
    2. Curtailment for force majeure
    3. Curtailment of emergency
    4. Priority of services for curtailment
Date | VersionJanuary 18, 2021 | 1.0
Keywords‘PNGRB’, ‘CGD’,’ City or Local Natural Gas Distribution Networks’, ‘Access Code’, ‘Standardized Access Agreement’
List of Legislation Referredi. Petroleum and Natural Gas Regulatory Board Act, 2006

ii. Petroleum and Natural Gas Regulatory Board (Access Code for City or Local Natural Gas Distribution Networks) Regulations, 2020

JurisdictionIndia
DomainNatural Gas| Downstream
Capacity DeclarationPipeline entity to determine and declare.
Capacity BookingInterested Shippers to submit offers.

 

Mandatory capacity for open access

 

Higher of 20% of CGD Network and compression capacity or maximum flow on any day.
Obligations of shippers and authorised entityi. Authorised Entity liable for compliance from receipt of gas to delivery point. Shipper liable for compliance before gas receipt by Authorized Entity and after delivery point.

ii. Authorised Entity to be last resort for domestic customers in case of shipper’s default.

Gas parameters:To conform with Schedule VI and apply on non-discriminatory basis.
ChargesShipper to pay charges to Authorized Entity.

Billing and collection of dues from customer is the responsibility of Shipper.

Confidentiality of InformationBoth shippers and authorized entity obligated to maintain confidentiality of all ‘information’.
Access Arrangementi. Capacity booking shall be finalised through an access arrangement which shall comply with the provisions specified in Schedule-I.

ii. Standard format of access arrangement to be published on authorized entity website within 45 days of declaration of its CGD network as common carrier or contract carrier.

Disclaimer The views appearing in this article are those of the author and not of Alaya Legal. The author may be reached at by writing to Alaya Legal at contact@alayalegal.com. Nothing herein is or may be construed as legal advice.