In an effort to curb the tendency of city gas retailers to charge a higher rate beyond a usage threshold, oil sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has ordered them to charge a uniform price for natural gas that they pipe to household kitchens for cooking purposes, regardless of consumption levels.
The government allocates natural gas priced at lower than market rates to city gas retailers for sale to households as piped natural gas (PNG). This is called APM gas. Since the allocation is made by the government at sub-market price, the expectation is that the city gas retailers will pass on the benefit to users.
However, the APM gas that is supplied to commercial establishments, like hotels, is to be priced at the market rate.
The PNGRB, in a notice, said it has come to light that “certain city gas distribution (CGD) entities are implementing a telescopic pricing structure for piped natural gas (PNG) domestic consumers, wherein as per SCM (Standard Cubic Meter), price of natural gas escalates as consumption surpasses a predefined threshold”.
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Calling such a practice “incorrect”, the regulatory body said this kind of pricing may “inadvertently facilitate the unauthorised use of subsidised administered price mechanism (APM) gas by commercial consumers, who may be misclassified as domestic consumers”.
Even though the body did not name the CGD companies indulging in such practice, it is common knowledge that PNGRB supplies APM gas to CGD entities to fulfil the PNG (Domestic) and CNG (Transport) demand.
“This allocation is made at a concessional rate compared to market or spot LNG prices, with the objective of promoting the adoption of natural gas across domestic households and the transport sector,” it clarified.
“Additionally, genuine domestic consumers with higher consumption levels may be unfairly subjected to elevated charges, despite natural gas being supplied to CGD entities at a uniform APM rate,” it noted.
The regulator advised CGD entities to undertake a thorough review of consumption patterns and investigate anomalous cases where domestic consumers exhibit significantly higher usage relative to the industry average, so that principles of equity and transparency may be upheld.
“Based on the findings, suitable corrective measures be instituted as per the regulations on the subject. PNG (Domestic kitchen usage) should be supplied at a uniform rate to all domestic household consumers, irrespective of their daily consumption levels,” a PNGRB statement said.
Just like piped natural gas, differential pricing exists even in LPG prices. While households buy 14.2-kg cylinders at subsidised rates, commercial establishments, like hotels and restaurants, are to use market-priced 19-kg commercial LPG cylinders.
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