Court quashes regulatory board's order on CNG

New Delhi, June 1 (IANS) The Delhi High Court Friday quashed an order of the Petroleum and Natural Gas Regulatory Board slashing the network tariff and compression charges with retrospective effect for CNG distributed by Indraprastha Gas Ltd in Delhi and adjoining areas.

A division bench of Acting Chief Justice A.K. Sikri and Justice Rajiv Sahai Endlaw set aside the April 9 order of the board saying it was not "empowered" to fix or regulate the maximum retail price at which gas was to be sold by retailers.

"The order dated 9 April, 2012, to the extent so fixing the maximum retail price or requiring the petitioner (Indraprastha Gas Ltd) to disclose the network tariff and the compression charges to its consumers is struck down/quashed," the court ruled.

The division bench made it clear that the regulatory board was not empowered to fix any component of network tariff and compression charges for compressed natural gas (CNG) as contended by Indraprastha Gas.

"We further hold that the board is also not empowered to fix any component of Network Tariff or Compression Charge for an entity such as the petitioner having its own distribution network.

"The provisions of the regulations in so far as construed by the board to be so empowering it are held to be bad/illegal," the court said.

The order came on a plea filed by Indraprastha Gas contending that the board did not give it a hearing and calculated the tariff, announced April 9, on the basis of the 2008 price levels for various inputs and charges.

The sole supplier of compressed natural gas in Delhi and national capital region had pleaded against the regulatory board's decision to regulate its network tariff and selling price.

The board had asked Indraprastha Gas to cut down its network tariff by 63 percent. In a retrospective decision, it 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 percent to Rs.38.58 per million British thermal units (mmBtu) as against Rs.104.05 per mmBtu sought by the company.

It also cut compression charge for CNG by 59 percent to Rs.2.75 per kg from Rs.6.66 per kg proposed by the company.

Indraprastha Gas in March hiked the prices of CNG in Delhi by Rs.1.70 a kg and Rs.1.90 per kg in Noida, citing a rise in input cost as the factor.