Petroleum and Natural Gas Regulatory Board had resorted to indirect method to control gas tariff
GN Bureau | July 1, 2015
Upholding verdict of Delhi high court, the supreme court on Wednesday said that the Petroleum and Natural Gas Regulatory Board (PNGRB) cannot set tariff for Indraprastha Gas Ltd (IGL).
The PNRGB’s dispute with Indraprastha Gas was over its gas transportation tariff. During the court case it was argued that PNGRB was trying to indirectly regulate prices of IGL as transport is an essential cost in the final pricing.
The gas regulator had also admitted that it did not have the powers to regulate the final retailing price. However, it argued that it does have the powers as per the statute to fix the transmission tariff. It had slashed the transportation and compression charges that IGL could levy by 64 percent.
The dispute began in April 2012 when PNRGB directed IGL to cut its retail prices. IGL moved court, and the high court backed the company, saying there were no statutory provisions that allowed PNRGB to fix retail gas prices. The PNGRB had appealed against the high court order in the supreme court.
The central government had also supported IGL's stand that PNGRB does not have the authority to regulate retail gas prices.
Meanwhile, shares of IGL surged as much as 17.8 percent after the SC verdict in its favour.
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