New Delhi: Deadlines for city gas projects will be extended to avoid penalising companies for delays caused by the nationwide lockdown, the head of downstream regulator has said. This would help more than a dozen companies implementing 136 city gas distribution projects across the country.

“We can on our own extend the timeline. Companies would want that,” DK Sarraf, chairman of the Petroleum and Natural Gas Regulatory Board, told ET. “We have to be helpful to the industry.”

The board will decide the quantum of extension after consultations with the industry.

The regulator had issued about 136 new city gas distribution licences over the past two years, picking winners primarily on the basis of the work pledged, including the number of piped gas connections, natural gas stations and length of the proposed pipeline. The companies are penalised for missing annual work programme targets they proposed during bidding.

The lockdown has disrupted pipe-laying and other efforts at setting up infrastructure by city gas companies.

“Once the lockdown is lifted, city gas projects should not take too long to revive. But bringing back labour would be a very big challenge,” Sarraf said. “A big share of migrant workers has gone back home. Families will not permit workers to return to the cities until they have the confidence that the health risk due to coronavirus has receded.”

Projects that have already been completed or are nearing completion will face the challenge of lower energy demand.

“Until industrial activity picks up, energy demand will remain low,” Sarraf said. “Lower gas prices will, however, have a soothing impact on the economy.”

Gas prices have crashed across the globe. Imported liquefied natural gas has fallen below $3 per million metric British thermal unit (mmBtu) while the domestic gas price is down to $2.39 per mmBtu.

The regulator is also considering offering city gas licenses in a new auction.

“When the lockdown is over, we will have to see how we can contribute to job creation. We will have to see which new projects can be initiated that can push up economic activity,” said Sarraf.

Some activity in the city gas sector can result in demand for steel pipes and create income for workers, which would boost consumption, he said.

Source Article