Sun. Jun 20th, 2021

City gas distribution

Transporting future fuel

#88 Common Carrier & Contract Carrier

7 min read
  1. Common carrier pipelines: Any pipeline which is used by more than one consumer on open access basis is called common carrier pipelines. The access to such pipeline is governed by the Access Code notified by PNGRB.
  2. Contract carrier pipelines: Any pipeline which operates under a fixed contract is called contract carrier pipeline. On conclusion of a contract, the contract may be extended or these pipelines are converted to common carrier pipeline by PNGRB’s permission.

Objectives for declaring natural gas pipeline as common carrier or contract carrier:

  1. Natural gas pipeline is widely accepted mode of bulk transportation of natural gas from a source to a delivery point over particular route. The concept of natural monopoly in transportation of natural gas is universally accepted in view of its capital intensiveness, safety factors and the need for protecting consumer’s interests. Therefore, consumer interest is best served by promoting competition, avoiding infructuous investments by optimum utilization of infrastructure of natural gas pipelines.
  2. The concept of allowing capacity in natural gas pipeline to be utilized by any entity on a non-discriminatory basis shall incentivize emergence of independent shippers of natural gas who shall enter into contract carrier or common carrier arrangements with entities owing such infrastructure for transportations of natural gas which, in turn, shall lead to development of competitive natural gas markets.

Contract carrier system for natural gas pipelines

  1. A contract carrier system implies that the capacity in a natural gas pipeline, over and above the entity’s own requirements, shall be available to any other entity subject to the latter entering into a firm contract for transportation of a volume of natural gas for a period of minimum one year, on such other terms and conditions as may be mutually agreed, and subject to the provisions of regulations notified from time to time under the Act and on payment of natural gas pipeline tariff as authorized under the petroleum and Natural Gas Regulatory Board( Determination of Natural Gas Pipeline Tariff) Regulations, 2008.
  2. The contract for transportation of natural gas shall only be for transportation of natural gas and without any obligation as to the sourcing of the natural gas.

Common carrier system for natural gas pipelines

  1. A common carrier system implies that the capacity in a natural gas pipeline, over and above the entity’s own requirement and capacity allocated on a contract carrier basis, shall be available to any other entity subject to the latter entering into a contract for transporting volume of natural gas normally for a period of less than one year, on such other terms and conditions as may be mutually agreed, and subject to the provisions of regulations notified from time to time under the Act and on payment of natural gas pipeline tariff as authorized under the Petroleum and Natural  Regulatory Board (Determination of Natural Gas Pipeline Tariff) Regulations, 2008:
  2. Provided that if the common carrier capacity is not fully utilized, the entity may contract the same for a period of one year or more.
  3. The contract for transportation of natural gas shall be only for transportation of natural gas and without any obligation as to the sourcing of the natural gas.
  4. Common carrier capacity available in natural gas pipeline at any given point of time shall be allocated to any entity seeking booking of the same on a non-discriminatory “first-come-first served’ basis.
  5. In case common carrier capacity is not available in a natural gas pipeline at any given point of time and another entity seeks booking of the same for a period of less than one year, the request shall be accommodated by following the procedure set out in regulation 12 of the Petroleum and Natural Gas Regulatory Board (Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008 and as amended from time to time.
  6. When the extra capacity in a natural gas pipeline to be provided on a common carrier basis is less than thirty three per cent of the sum of the capacity requirements of the entity and the firmed up contracted capacity  with other entities, the same will be made available- (i) on expiry of firm contracts. or (ii) by way of expansion of capacity in the natural gas pipeline:
  7. Provided that when the common carrier capacity is less than ten per cent of the sum of the capacity requirements of the entity and the firmed up contracted capacity with other entities, the Board may on a suo motu basis and after following the due process of public consultation require an entity to build extra capacity on such time lines and other terms and conditions as may be specified by the Board.

Declaring of existing pipeline for transportation of natural gas as a common or contract carrier

  1. If the Board is of the opinion that it is necessary or expedient to declare an existing pipeline for transportation of natural gas as a common or contract carrier,-

(a)    It may give wide publicity of its intention to do so by inviting objections and suggestions within a period of not less than three weeks from the date of invitation;

(b)   The Board may also provide the entity owing the natural gas pipeline an opportunity of being heard within a minimum notice period of fifteen days from the close of the invitation for objections and suggestions.

  1. After considering the objections and suggestions received and after hearing the entity owing the natural gas pipeline under statement above, the Board may declare the pipeline as a common or contract carrier subject to such terms and conditions as it may fix.
  1. Notwithstanding anything in the above two statement. the entity may, on a suo motu basis , apply to the Board seeking declaration of a natural gas pipeline as a common carrier  or contract carrier and the Board after giving an opportunity of hearing to the entity, may within a period of fifteen days from the receipt of such an application, declare the revenant natural gas pipeline as a common or contract carrier on such terms and conditions as it deems fit.

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