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PETROLEUM AND NATURAL GAS REGULATORY BOARD, ACT

Ministry of Law and Justice

Act nº 19 of 2006


  • Chapter I
  • Chapter II
  • Chapter III
  • Chapter IV
  • Chapter V
  • Chapter VI
  • Chapter VII
  • Chapter VIII
  • Chapter IX
  • Chapter X
  • Act nº 19 of 2006

Preamble

THE PETROLEUM AND NATURAL GAS REGULATORY BOARD ACT, 2006

[Act, No. 19of 2006]

[31st March,2006]

PREAMBLE

An Act to provide forthe establishment of Petroleum and Natural Gas Regulatory Board to regulate therefining, processing, storage, transportation, distribution, marketing and saleof petroleum, petroleum products and natural gas excluding production of crudeoil and natural gas so as to protect the interests of consumers and entitiesengaged in specified activities relating to petroleum, petroleum products andnatural gas and to ensure uninterrupted and adequate supply of petroleum,petroleum products and natural gas in all parts of the country and to promotecompetitive markets and for matters connected therewith or incidental thereto.

BE it enacted byParliament in the Fifty-seventh Year of the Republic of India as follows:--

Chapter I

Section 1. Short title, extent, commencement and application

(1) This Act may be called the Petroleum and Natural Gas Regulatory Board Act, 2006.

(2) It extends to the whole of India.

(3) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be Construed as a reference to the coming into force of that provision.

(4) It applies to refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas.

1. Effective from 01.10.2007 except Section 16, as per Notification No. GSR637(E) dated 01.10.2007.


Section 2. Definitions

In this Act, unless thecontext otherwise requires,--

(a) "affiliatecode of conduct" means the code of conduct governing entities engaged instorage, transmission, distribution, marketing and sale of natural gas undersub-section (1) of section 21;

(b) "AppellateTribunal" means the Appellate Tribunal referred to in section 30;

(c) "appointedday" means the date on which the Board is established under sub-section (1)of section 3;

(d) "authorisedentity" means an entity--

(A) registered by theBoard under section 15 --

(i) to market anynotified petroleum, petroleum products or natural gas, or

(ii) to establish andoperate liquefied natural gas terminals, or

(B) authorised by theBoard under section 16 --

(i) to lay, build,operate or expand a common carrier or contract carrier, or

(ii) to lay, build,operate or expand a city or local natural gas distribution network;

(e) "autoliquefied petroleum gas" means a mixture of certain light hydrocarbonsderived from petroleum, which are gaseous at normal ambient temperature andatmospheric pressure but may be condensed to the liquid state at normal ambienttemperature by the application of moderate pressure, and which conform to suchspecifications for use as fuel in vehicles, as the Central Government may, inconsultation with the Bureau of Indian Standards, notify from time to time;

(f) "Board"means the Petroleum and Natural Gas Regulatory Board established undersub-section (1) of section 3;

(g) "Bureau ofIndian Standards" means the Bureau of Indian Standards established undersection 3 of the Bureau of Indian Standards Act, 1986(63 of 1986);

(h)"Chairperson" means the Chairperson of the Board appointed undersub-section (1) of section 4;

(i) "city orlocal natural gas distribution network" means an inter-connected network ofgas pipelines and the associated equipment used for transporting natural gasfrom a bulk supply high pressure transmission main to the medium pressuredistribution grid and subsequently to the service pipes supplying natural gas todomestic, industrial or commercial premises and CNG stations situated in aspecified geographical area.

Explanation.--For thepurposes of this clause, the expressions "high pressure" and"medium pressure" shall mean such pressure as the Central Governmentmay, by notification, specify to be high pressure or, as the case may be, mediumpressure;

(j) "commoncarrier" means such pipelines for transportation of petroleum, petroleumproducts and natural gas by more than one entity as the Board may declare orauthorise from time to time on a non-discriminatory open access basis undersubsection (3) of section 20, but does not include pipelines laid to supply--

(i) petroleum productsor natural gas to a specific consumer; or

(ii) crude oil;

Explanation.- For thepurposes of this clause, a contract carrier shall be treated as a commoncarrier, if--

(i) such contractcarrier has surplus capacity over and above the firm contracts entered into; or

(ii) the firm contractperiod has expired.

(k) "CNGstation" means filling station where one or more dispensing units areprovided for sale of compressed natural gas;

(l) "compressednatural gas or CNG" means natural gas used as fuel for vehicles, typicallycompressed to the pressure ranging from 200 to 250 bars in the gaseous state;

(m) "contractcarrier" means such pipelines for transportation of petroleum, petroleumproducts and natural gas by more than one entity pursuant to firm contracts forat least one year as may be declared or authorised by the Board from time totime under sub-section (3) of section 20;

(n) "dealer"means a person, association of persons, firm, company or co-operative society,by whatsoever name called or referred to, and appointed by an oil company topurchase, receive, store and sell motor spirit, high speed diesel, superiorkerosene oil, auto liquefied petroleum gas or natural gas;

(o)"distributor" means a person, association of persons, firm, company orco-operative society, by whatsoever name called or referred to, and appointed byan oil company to purchase, receive, store and sell to consumers liquefiedpetroleum gas in cylinders;

(p) "entity"means a person, association of persons, firm, company or co-operative society,by whatsoever name called or referred to, other than a dealer or distributor,and engaged or intending to be engaged in refining, processing, storage,transportation, distribution, marketing, import and export of petroleum,petroleum products and natural gas including laying of pipelines fortransportation of petroleum, petroleum products and natural gas, or laying,building, operating or expanding city or local natural gas distribution networkor establishing and operating a liquefied natural gas terminal;

(q) "exchange ofproducts" shall mean giving and receiving of a petroleum product inaccordance with an agreement entered into by the concerned entities;

(r) "high speeddiesel" means any hydrocarbon oil (excluding mineral colza oil andturpentine substitute), which conforms to such specifications for use as fuel incompression ignition engines, as the Central Government may, in consultationwith the Bureau of Indian Standards, notify from time to time;

(s) "kerosene orsuperior kerosene oil" means a middle distillate mixture of hydrocarbonswhich conforms to such specifications, as the Central Government may, inconsultation with the Bureau of Indian Standards, notify from time to time;

(t) "liquefiednatural gas terminal" means the facilities and infrastructure required to-

(i) receive liquefiednatural gas;

(ii) store liquefiednatural gas;

(iii) enableregasification of liquefied natural gas; and

(iv) transportregasified liquefied natural gas till the outside boundaries of the facility;

(u) "liquefiedpetroleum gas" means a mixture of light hydrocarbons containing propane,isobutane, normal butane, butylenes, or such other substance which is gaseous atnormal ambient temperature and atmospheric pressure but may be condensed toliquid state at normal ambient temperature by the application of pressure andconforms to such specifications, as the Central Government may, in consultationwith the Bureau of Indian Standards, notify from time to time;

(v) "localdistribution entity" means an entity authorised by the Board under section20 to lay, build, operate or expand a city or local natural gas distributionnetwork;

(w) "marketingservice obligations" means obligations--

(i) to set upmarketing infrastructure and retail outlets in remote areas in respect ofnotified petroleum and petroleum products;

(ii) to maintainminimum stock of notified petroleum and petroleum products;

(iii) of a localdistribution entity to supply natural gas to consumers; and

(iv) such otherobligations as may be specified by regulations;

(x) "maximumretail price" means the maximum price fixed by an entity at which thepetroleum, petroleum products and natural gas may be sold to the retailconsumers and includes all taxes, cess and levies, local or otherwise andfreight or commission payable to the dealers;

(y) "member"means a member of the Board appointed under sub-section (1) of section 4 andincludes the Member (Legal) and the Chairperson;

(z) "motorspirit" means any hydrocarbon oil (excluding crude mineral oil) used asfuel in spark ignition engines which conforms to such specifications, as theCentral Government may, in consultation with the Bureau of Indian Standards,notify from time to time;

(za) "naturalgas" means gas obtained from bore-holes and consisting primarily ofhydrocarbons and includes-

(i) gas in liquidstate, namely, liquefied natural gas and regasified liquefied natural gas,

(ii) compressednatural gas,

(iii) gas importedthrough transnational pipe lines, including CNG or liquefied natural gas,

(iv) gas recoveredfrom gas hydrates as natural gas,

(v) methane obtainedfrom coal seams, namely, coal bed methane,

but does not includehelium occurring in association with such hydrocarbons;

(zb)"notification" means a notification published in the Official Gazetteand the expression "notified" with its cognate meanings andgrammatical variations, shall be construed accordingly;

(zc) "notifiedpetroleum, petroleum products and natural gas" means such petroleum,petroleum products and natural gas as the Central Government may notify fromtime to time, after being satisfied that it is necessary or expedient so to dofor maintaining or increasing their supplies or for securing their equitabledistribution or ensuring adequate availability;

(zd) "oilcompany" means a company registered under the Companies Act, 1956(1 of1956) and includes an association of persons, society or firm, by whatsoevername called or referred to, for carrying out an activity relating to petroleum,petroleum products and natural gas;

(ze)"petroleum" means any liquid hydrocarbon or mixture of hydrocarbons,and any inflammable mixture (liquid, viscous or solid) containing any liquidhydrocarbon, including crude oil and liquefied petroleum gas, and the expression'petroleum product' shall mean any product manufactured from petroleum;

(zf) "pipelineaccess code" means the code to establish a framework for third party accessto pipelines under sub-clause (i) of clause (e) of section 11;

(zg)"prescribed" means prescribed by rules made by the Central Governmentunder this Act;

(zh)"regulations" means regulations made by the Board under this Act;

(zi) "restrictivetrade practice" means a trade practice which has, or may have, the effectof preventing, distorting or restricting competition in any manner and inparticular,-

(i) which tends toobstruct the flow of capital or resources into the stream of production, or

(ii) which tends tobring about manipulation of prices, or conditions of delivery or to affect theflow of supplies in the market relating to petroleum, petroleum products ornatural gas or services in such manner as to impose on the consumers unjustifiedcosts or restrictions;

(zj) "retailoutlet" means filling station where one or more dispensing pumps have beenprovided for sale of motor spirit, high speed diesel, auto-liquefied petroleumgas or natural gas and includes distributorship for liquefied petroleum gas ordealership for superior kerosene oil or CNG stations;

(zk) "retailservice obligations" means obligations of dealers and distributors formaintaining supplies to consumers throughout the specified working hours and ofspecified quality, quantity and display of maximum retail price of notifiedpetroleum, petroleum products and natural gas including CNG and such otherobligations, as may be specified by regulations;

(zi) "rules"means rules made by the Central Government under this Act;

(zm)"Secretary" means the Secretary of the Board;

(zn)"transportation rate", in relation to common carrier or contractcarrier or a city or local natural gas distribution network, means such rate formoving each unit of petroleum, petroleum products or natural gas as may be fixedby regulations.

Chapter II

Section 3. Establishment and incorporation of the Board

(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Board to be called the Petroleum and Natural Gas Regulatory Board.

(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued.

(3) The Board shall consist of a Chairperson, a Member (Legal) and three other members to be appointed by the Central Government.

(4) The head office of the Board shall be at New Delhi and regional offices at such places as the Board may deem necessary having regard to public interest and magnitude of the work.

Section 4. Qualifications for appointment of Chairperson and other members

(1) The Central Government shall appoint the Chairperson and other members of the Board from amongst persons of eminence in the fields of petroleum and natural gas industry, management, finance, law, administration or consumer affairs:

Provided that no person shall be appointed as Member (Legal) unless he--

(a) is qualified to be a Judge of a High Court; or

(b) has been a member of the Indian Legal Service and has held a post in Grade I of that Service for at least three years.

(2) The Central Government shall, for the purposes of selecting the Chairperson and after members of the Board and for preparing a panel of persons to be considered for appointment as the Technical Member (Petroleum and Natural Gas) of the Appellate Tribunal, constitute a Search Committee consisting of--

(i) Member, Planning Commission in charge of the energy sector - Chairperson;

(ii) Secretary to the Government of India, Ministry of Petroleum and Natural Gas - Member;

(iii) Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs - Member,

(iv) Secretary to the Government of India in charge of Commerce, Ministry of Commerce and Industry - Member; and

(v) Secretary to the Government of India, Department of Legal Affairs, Ministry of Law and Justice - Member.

Section 5. Term of office, conditions of service, etc., of Chairperson and other members

(1) Before appointing any person as the Chairperson or other member, the Central Government shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as Chairperson or such other member.

(2) The Chairperson and other members shall hold office for a term of five years from the date on which they enter upon their offices or until they attain the age of sixty-five years, whichever is earlier:

Provided that the Chairperson and other members shall not be eligible for re-appointment.

Explanation-For the purposes of this section, appointment of a member as Chairperson shall not be deemed to be re-appointment.

(3) A person in the service of the Central Government, a State Government or an undertaking, corporation or company owned or controlled by the Central Government or a State Government or from any other non-Governmental or corporate body shall resign or retire from such service before joining as the Chairperson or other member, as the case may be.

(4) The salaries and allowances payable to and the other terms and conditions of service of the Chairperson and the other members shall be such as may be prescribed:

Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or any other member shall be varied to his disadvantage after appointment.

(5) The Chairperson or other member may resign his office by giving notice thereof in writing to the Central Government and on such resignation being accepted, the Chairperson or such other member shall be deemed to have vacated his office.

(6) The Chairperson or any other member, upon ceasing to hold office as such, shall-

(a) be ineligible for further employment under the Central Government or any State Government; and

(b) not accept any commercial employment for a period of two years from the date he ceases to hold such office.

Explanation.--For the purposes of this section, "commercial employment" means employment in any capacity under, or agency of, a person engaged in trading, commercial, industrial or financial business in any field and includes also a director of a company or partner of a firm or setting up practice either independently or as partner of a firm or as an advisor or a consultant.

Section 6. Powers of Chairperson

The Chairperson shallhave the powers of general superintendence and directions in the conduct of theaffairs of the Board and shall, in addition to presiding over the meetings ofthe Board, exercise and discharge such other powers and functions of the Board,as may be assigned to him by the Board.

Section 7. Removal of Chairperson or any other member from office

The Central Government may remove from office the Chairperson or any other member, who--

(a) has been adjudged as insolvent; or

(b) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or

(c) has become physically or mentally incapable of acting as a member; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a member; or

(e) has so abused his position as to render his continuance in office prejudicial to the public interest:

Provided that no Chairperson or other member shall be removed from office under clause (d) or clause (e) unless the Central Government, after holding an inquiry by any person appointed or authority constituted for the purpose and in accordance with such procedure as may be prescribed in this behalf, is satisfied that such person ought on such ground or grounds to be removed.

Section 8. Meetings of the Board

(1) The Board shall meet at such times and places, and shall observe such procedure in regard to the transaction of business at its meetings (including the quorum at such meetings) as may be provided by regulations.

(2) The Chairperson or, if he is unable to attend a meeting of the Board, the senior-most member present, reckoned from the date of appointment to the Board, shall preside at the meeting:

Provided that in case of common date of appointment of members, the member senior in age shall be considered as senior to the other members.

(3) All questions which come up before any meeting of the Board shall be decided by a majority of the members present and voting, and in the event of an equality of votes, the Chairperson or in his absence, the person presiding shall have a second or casting vote.

(4) All orders and decisions of the Board shall be authenticated by the Secretary or any other officer of the Board duly authorised by the Chairperson in this behalf.

Section 9. Vacancies, etc., not to invalidate proceedings of the Board

No act or proceeding of the Board shall be invalid merely by reason of--

(a) any vacancy in, or any defect in the constitution of, the Board; or

(b) any defect in the appointment of a person acting as a member of the Board; or

(c) any irregularity in the procedure of the Board not affecting the merits of the case.

Section 10. Officers and other employees of the Board

(1) The Central Government may, in consultation with the Board, appoint a Secretary to exercise and perform such powers and duties, under the control of the Chairperson as may be specified by regulations:

Provided that no such consultation shall be necessary for appointment of the first Secretary of the Board.

(2) The Board may, with the approval of the Central Government, determine the number, nature and categories of other officers and employees required to assist the Board in the efficient discharge of its functions.

(3) The salaries and allowances payable to and the other terms and conditions of service of the Secretary, the other officers and employees of the Board shall be such as may be prescribed.

(4) The Board may appoint consultants required to assist in the discharge of its functions on such terms and conditions as may be determined by regulations.

Chapter III

Section 11. Functions of the Board

The Board shall--

(a) protect the interest of consumers by fostering fair trade and competition amongst the entities;

(b) register entities to--

(i) market notified petroleum and petroleum products and, subject to the contractual obligations of the Central Government, natural gas;

(ii) establish and operate liquefied natural gas terminals;

(iii) establish storage facilities for petroleum, petroleum products or natural gas exceeding such capacity as may be specified by regulations;

(c) authorise entities to--

(i) lay, build, operate or expand a common carrier or contract carrier;

(ii) lay, build, operate or expand city or local natural gas distribution network;

(d) declare pipelines as common carrier or contract carrier;

(e) regulate, by regulations,--

(i) access to common carrier or contract carrier so as to ensure fair trade and competition amongst entities and for that purpose specify pipeline access code;

(ii) transportation rates for common carrier or contract carrier;

(iii) access to city or local natural gas distribution network so as to ensure fair trade and competition amongst entities as per pipeline access code;

(f) in respect of notified petroleum, petroleum products and natural gas--

(i) ensure adequate availability;

(ii) ensure display of information about the maximum retail prices fixed by the entity for consumers at retail outlets;

(iii) monitor prices and take corrective measures to prevent restrictive trade practice by the entities;

(iv) secure equitable distribution for petroleum and petroleum products;

(v) provide, by regulations, and enforce, retail service obligations for retail outlets and marketing service obligations for entities;

(vi) monitor transportation rates and take corrective action to prevent restrictive trade practice by the entities;

(g) levy fees and other charges as determined by regulations;

(h) maintain a data bank of information on activities relating to petroleum, petroleum products and natural gas;

(i) lay down, by regulations, the technical standards and specifications including safety standards in activities relating to petroleum, petroleum products and natural gas, including the construction and operation of pipeline and infrastructure projects related to downstream petroleum and natural gas sector;

(j) perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act.