The article is written by Shreya Pandey from Banasthali University, Jaipur. The article deals with the Petroleum and Natural Gas Regulatory Board Act, 2006.

Introduction

The Petroleum and Natural Gas Regulatory Board Act, 2006 was legislated to establish the Petroleum and Natural Gas Regulatory Board. The board is constituted to regulate refining, processing, storage, transportation, distribution, marketing, and sale of petroleum, petroleum products, and natural gas excluding the production of crude oil and natural gas.

Objectives

The objectives of the Act are:

1. To establish the Petroleum and Natural Gas Regulatory Board.
2. To regulate refining, storage, processing, transportation, distribution, marketing, and sale of petroleum, petroleum products, and natural gas except for the production of crude oil and natural gas.
3. For the protection of consumer’s interests in certain activities related to petroleum, its products, and natural gas.
4. Ensuring a sufficient and continuous supply of petroleum, its products, and natural gas all around the country.
5. Promoting competitive business and related matters.

Composition of the board

The Petroleum and Natural Gas Regulatory Board consists of the following members appointed by the Central Government:

• Chairperson
• Member(Legal)
• Three other members

These members will hold their office for 5 years or until the attainment of 65 years of age. They should be eminent in fields of petroleum and natural gas industry, management, finance, law, administration, or consumer affairs. According to Section 4, The member (legal) should be qualified for being a judge in High Court or has been a member of Indian Legal Service or has been in a post of grade 1 for three years in that service. The Chairperson has powers of general superintendence and directs the conduct of the Board. He presides over the meeting of the Board and can exercise other powers and functions as assigned to him.  

Functions of Board

The functions of the Petroleum and Natural Gas Regulatory Board (PNGRB) established by this Act are:

• Protection of consumers’ interest by promoting fair trade and competition among the competitors. 
• Registration of entities to market notified petroleum and its products that are subject to contract by Central government, and natural gas.
• Registration of entities establishes and operates LPG terminals.
• Registration of entities to set up storage facilities petroleum, its products, and natural gas, if it exceeds the capacity provided by regulations.
• Authorization of entities to lay, build, operate, or expand:

1.  A common or contract carrier.
2. City or local natural gas distribution network. 

• Declaring pipelines to be common or contract carriers.
• Regulating access to common or contract carriers to ensure fair trade and competition among the entities and specifying the pipeline access code. 
• Regulating transportation rates for common or contract carriers.
• Regulating access to city or local natural gas distribution networks to ensure fair trade and competition among the competitors according to the pipeline access codes.
• Ensuring sufficient availability of petroleum, petroleum products, and natural gas.
• Ensuring the display of information about fixed maximum retail prices at the retail outlets of petroleum, petroleum products, and natural gas.
•  Monitoring prices and taking corrective steps to prohibit Restrictive Trade Practises.
• Ensuring the equal distribution of petroleum and petroleum products.
• Monitoring transportation fees and levying fees and other charges according to the regulation.
• Maintaining a data bank of information related to petroleum, petroleum products, and natural gas.
• Laying down the technical and safety standards, construction, and operation of pipelines, infrastructure products, and other specifications through regulations in activities relating to petroleum, petroleum products, and natural gas.
• Performing other functions as specified by the Central Government to fulfil the objectives of the Act.

Power of the board

Under Section 12 of the Act, certain powers are given to the PNGRB to deal with the complaints and resolve disputes among the entities. The powers under the Act are:

• The Board is empowered to adjudicate and decide any dispute or matter among the entities.
• The Board on receiving any complaint from any person is empowered to conduct an inquiry and investigation.
• The Board can pass any order or issue any direction or refer the matter for investigation as it thinks fit.
• The Board has similar powers as given to the Civil Court under the Civil Procedure Code, 1908.
• The Board is subjected to the principles of natural justice and the provisions of the Act.

Registration and authorization

The Petroleum and Natural Gas register can be kept at the head office of the Board. The register must contain details of the entities including marketing notified petroleum, petroleum products, and natural gas, or, establishing and operating liquified natural gas terminals, or establishing storage facilities for petroleum, petroleum products, and natural gas exceeding the specified capacity. The registration must be done only if they fulfil the eligibility conditions and make an application of registration to the Board.

The authorization of an entity must be done for laying, building, operating, or expanding a common carrier or a city or a local natural gas distribution network as provided by the Board. The entity who is or proposes to lay, build, or expand a pipeline shall submit an application for authorization in writing to the Board in such manner and such form including the fees as specified by the Board. The Board is empowered to either accept or reject the application based on the regulations, norms and policy guidelines. 

The copy of the entries made in the register shall be admissible as evidence before the Court. The register shall be kept in the head office which shall be open to public inspection and any person after applying to the Board and submitting the fee may obtain a certified copy of any entry in the register.  

Dispute settlement

Chapter V of the Act deals with the settlement of the disputes. A bench consisting of a member (Legal) and one or more member(s) as nominated by the Chairperson shall settle the disputes under this Act. 

Section 24 of the Act empowers the Bench to exercise its power as Civil Court on matters-

1. Refining, processing, storage, transport, and distribution and marketing and sale of petroleum, petroleum products, and natural gas.
2. Quality of service and security of supply to the consumers by the entities.
3. Dispute arising under Section 15 or Section 19.

Section 25 states that the complaint can be filed by any person before the Board to refer to the dispute between the entities or any matter of the entities or any other matter relating to the provisions of the Act. The complaint must be filed within sixty days from the date of any contravention, act, or any conduct that took place. The complaint shall be accompanied by fees as provided under the regulation. 

Under Section 26, the Board is empowered to appoint an officer, having qualifications and experience, as an Investigating Officer to investigate in the matters as specified by the regulations. If any person contravenes any directions of the Board then the Board is empowered to impose a civil penalty on that person and the order passed by the Board call be deemed to be a decree.

Section 27 of the Act deals with certain factors that the Board takes into account while deciding any dispute. These factors are-

• Amount of inappropriate gain and unfair advantage obtained because of a default,
• Amount of loss suffered by an entity because of a default, and
• The repetitive nature of the default.

Appellate Tribunal

Chapter VI of the Act deals with the Appellate Tribunal. Section 30 of the Act states that the Appellate Tribunal established under Sec 110 of the Electricity Act, 2003 shall be the Appellate Tribunal for this Act. The Central  Government shall appoint one or more Technical Members (Petroleum and Natural Gas) in the Appellate Tribunal, or designate a Technical Member of the Electricity Appellate Tribunal as Technical Member (Petroleum and Natural Gas). The appointment of the Technical Members (Petroleum and Natural Gas) is provided under Section 31 under which a Search Committee is constituted for such an appointment. The Technical Member (Petroleum and Natural Gas) shall possess the following qualifications-  

• He is or has been a Secretary for one year at least in the Ministry of Central Government having sufficient experience in the energy sector and especially in matters relating to the petroleum and natural gas sector.
• He is or has been a person of ability possessing knowledge and experience in dealing with matters of exploration, production, transmission pipelines, marketing, or regulation of petroleum, petroleum products, or natural gas.

Any person who is aggrieved by any order or decision of the Board can appeal to the Appellate Tribunal under Section 33. The Section states that the appeal must be made within 30 days from the date on which the person received a copy of the order or decision. The Appellate Tribunal shall dispose of the appeal within 90 days. The Appellate Tribunal is empowered to make its own rules for conducting the proceedings consistent with the provisions of this Act, under Section 35. The orders passed by the Appellate Tribunal are to be executed as a decree of Civil Court and it is also empowered with similar powers as of Civil Court under Section 36.  Any appeal against the order or decision of the Appellate Tribunal lies before the Supreme Court under Section 37 unless the decision or order is made by the consent of the parties.

Offences and punishment 

Chapter IX of the Act deals with the provisions relating to offences and punishment. 

• If any person contravenes any direction of the orders given by the Board, then the penalty of rupees twenty-five crores is imposed, and in case of continuing contravention, an additional fine of ten lakh every day during the contravention period. (Section 44)
• If any person wilfully fails to comply with the orders of the Appellate Tribunal, then the penalty of one crore rupees is imposed, and in case of continuing contravention, an additional fine that may extend to two crore rupees for every day till the contravention continues. (Section 45)
• If an entity markets any unregistered or unauthorized petroleum, petroleum products, or natural gas, he shall be punished for a maximum of 3 years or fine up to twenty-five crore or both, and in case of continuing marketing, an additional sum of ten lakh per day. (Section 46)
• If a person establishes or operates an unregistered liquified natural gas terminal, then he shall be punished with imprisonment that may extend till 3 years or fine of rupees twenty-five crores or both, and in case of continuous operation, an additional fine of ten lakh rupees per day. (Section 47)
• If a person lays, build, operates, or expands unauthorized common carrier, or contract carrier, or a city or local natural gas distribution network, then he shall be punished with an imprisonment maximum of three years or a fine of rupees twenty-five crores or both, and in case of continuing contravention, an additional fine of rupees ten lakh per day. (Sectiokn 48)
• If a person willfully damages, removes, destroys any pipeline or city or local natural gas network or common carrier or contract carrier, then such person shall be punished with imprisonment of maximum three years or fine of rupees twenty-five crores or both, and in case of continuous contravention, an additional fine of rupees ten lakh per day. (Section 49)
• In case, where an offence is committed by a company, then the person-in-charge is held responsible for the contravention. (Section 50)

Conclusion

The Act was enacted to fulfil its objective of establishing the Regulatory Board to efficiently perform its functions provided under the Act. The Act successfully establishes the Board for regulating matters related to petroleum and natural gas. However, there were certain other Acts and Rules like The Petroleum Act, 1934, the Oilfields (Regulation and Development) Act, 1948, etc enacted. Petroleum and Natural Gas Rules, 1959, 2002, 2009 were enacted to regulate the grant of exploration licenses and mining leases which belong to the government. The Petroleum Amendment Rules, 2011 was amended to help in better regulation of the production, exploration, refining, pipelines, etc. 

References

• https://www.slideshare.net/kadweiser/petroleum-natural-gas-regulatory-board-act
• https://www.indiacode.nic.in/bitstream/123456789/2012/1/200619.pdf
• https://currentaffairs.gktoday.in/tags/petroleum-and-natural-gas-regulatory-board

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: