Petroleum and Natural Gas Regulatory Board Regulations for CGD Network 1

Application of CGD rules Regulation shall apply to entity which is Laying, building, operating or expanding or which proposes to Lay, build, operate or expand a CGD network. CGD network shall be designed as per PNGRB technical standard and specifications, safety standards for supplying natural gas on a sustained basis. 2

Volumetric Threshold Less than 50,000 SCMD per customer To be supplied only through CGD network More than 50,000 SCMD & Less than 100,000 SCMD per customer Consumer’s choice to take from CGD network or a separate consumer pipeline More than 100,000 SCMD per customer Through separate consumer pipeline 3

Process for Grant of Authorization 4 Reject the Proposal In case of single bid Board may go for re bid

Minimum Eligibility Criteria Payment of application fees as specified under the PNGRB (levy of fee and other charges) regulations, The entity is either a body corporate or undertakes to become a company registered under the companies Act on being declared as a successful bidder. The entity should have a credible plan sourcing natural gas for supply in the proposed CGD network. The entity should not have been penalized under section 28 or punished under chapter IX of the PNGRB Act

Minimum Eligibility Criteria- Technical Entity having experience of laying & building 300km of hydrocarbon pipeline may be on cumulative basis Entity on its own / with joint venture (with 11% equity) having experience of at least one year in O&M of a CGD network Entity having at least three technically qualified personnel with experience in a) Commissioning of hydrocarbon pipeline b) O&M of natural gas pipelines, gas compressors c) Commercial issues including gas pricing, accounting d) Safety of natural gas infrastructure.

Minimum Eligibility Criteria-Financial TierPopulation (in Million) Minimum combined Net Worth of the entity along with its promoters available for investments in single CGD network (Rs in Million) I5 million or more1500 for a population of 5 million and proportionately higher for bigger cities II 1 million or more but less than 5 million 1000 III 0.5 million or more but less than 1 million 500 IV 0.25 million or more but less 0/50 million 250 V 0.1 million or more but less than 0.25 million 100 VILess than 0.1 million50

Bid Bond(E.M.D) TierPopulationMinimum Bid bond amount Rs-Million I5 million or more50 for a population of 5 million and proportionately higher for higher population II 1 million or more but less than 5 million 30 III 0.5 million or more but less than 1 million 20 IV 0.25 million or more but less 0.50 million 15 V 0.1 million or more but less than 0.25 million 10 VILess than 0.1 million5 8

Bid Parameters ParameterWeightage Lowness of the present value* of the overall unit network tariff over the economic life of the project 40% Lowness of the present value* of the compression charge for CNG over the economic life of the project 10% Highness of the present value* of the inch-km of steel pipeline during the period of exclusivity in terms of exemption from the purview of the contract carrier or common carrier 20% Highness of the present value* of the number of PNG domestic connections during the period of exclusivity in terms of exemption from the purview of the contract carrier or common carrier * Present value to be computed at discount rate of 14% 30% 9

Performance Bond TierPopulationAmount( Rs in million) (5% of the project cost or the following whichever is higher) I5 million or more100 II 1 million or more but less than 5 million 60 III 0.5 million or more but less than 1 million 40 IV 0.25 million or more but less 0.50 million 30 V 0.1 million or more but less than 0.25 million 20 VILess than 0.1 million10

Regulations for Exclusivity for City or Local Natural Gas Distribution Networks 11

Types of Exclusivity Exclusivity for laying, building and expanding CGD network Exclusivity from the purview of the common carrier or contract carrier 12

Laying, Building, Expanding CGD Network Exclusivity period for the economic life of the project is 25 years Entity to meet service obligations ; in case of default, it may lose exclusivity PNGRB may consider extending exclusivity by a period of 10 years beyond economic life of the project 13

Common Carrier or Contract Carrier Five years from the date of authorization in case of new projects(marketing exclusivity ) In case of existing projects Three years * in case the project is under operation for three years or more before the appointed day Five years * in other cases * from he date of commencement of physical laying, building, operation or expanding the network 14

Service Obligations During the period of exclusivity from the purview of the common carrier or contract carrier Provide domestic PNG connections as per bid* Lay/build steel pipeline as per inch-km bid* Reach all wards or charge areas Provide domestic PNG connectivity at demand within a distance of 25 meters of the metering unit at consumer end till the tap-off point 15

Service Obligations Post Exclusivity Continue to expand the network to meet the requirement of its own customers and those of other entities. Allow third party access on a non-discriminatory basis to other entities desirous of using the network 16

Default & Termination In case of failure of service obligation 25% of Performance bond shall be en-cashed for the first default 50% of Performance bond shall be en-cashed for the second default 100% of Performance bond shall be en-cashed for the third default and authorization shall be terminated 17

Default & Termination In addition Board may levy civil penalties u/s 28 of PNGRB act Rs 1 Cr (max penalty)+Rs 10 Lacs per day continuation of default In case default is with regard to restrictive trade practice 5 times of unfair gain made by entity or Rs 10 Cr which ever is higher In addition Board may levy Rs 25 Cr penalty (max) + Rs 10 Lacs. per day continuation of default 18

Thanks 19