'Pipelines must not get common carrier status' | business | Hindustan Times
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'Pipelines must not get common carrier status'

Petroleum ministry is strongly opposed to declaring oil and gas pipelines as public roads, reports Deepak Joshi.

business Updated: Aug 03, 2007 22:00 IST
Deepak Joshi

The Petroleum Ministry has expressed its strong opposition to declaring the existing oil and gas transportation pipelines as common carriers -- much like public roads.

The ministry is also opposed to the common carrier principle being extended to associated assets, including handling facilities at ports, terminals and airports.

An integrated energy policy recommended by the Rangarajan committee had suggested allowing access to all competing suppliers to non-dedicated transportation and distribution assets in the oil and gas sectors, including facilities at ports and airports, under the common carrier principle.

The ministry has contended that these assets were created when the oil and natural gas sector was almost completely in the public sector domain. However, the ministry has agreed to expand the scope and include the associated storage and other facilities under the common principle on a prospective basis in future activities for both gas and product pipelines.

Many policy makers contend that ideally these assets should be stripped off from current owners with due compensation and placed under a common carrier regime to promote competition.

The Planning Commission, however, has suggested that a solution could be found by empowering the Petroleum and Natural Gas Regulatory Board to adjudicate the commercial terms under which such existing assets can be made available to competing users if so requested by a potential user of such assets. This will ensure that restrictive practices are not used to hinder competition, the Commission has said.

The Commission has also stressed the need to opt for a full-trade parity price and urged the Petroleum Ministry to indicate a timeline for instituting it. “Full price competition at the refinery gate and retail level should be the ultimate objective since the administered price mechanism regime has been dismantled,” states a note on the issue.

The Rangarajan Committee had recommended a weighted average of import parity and export parity prices in the ratio of 80:20. However, the plan panel felt that trade parity pricing should ideally be a short-term measure.