Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

[19th March, 2008]

In exercise of the powers conferred by Section 61 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006), the Petroleum and Natural Gas Regulatory Board hereby makes the following regulations, namely:—

Regulation - 1. Short title and commencement.

(1)     These regulations may be called the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008.

(2)     They shall come into force on the date of their publication in the Official Gazette.

Regulation - 2. Definitions.

(1)     In these regulations, unless the context otherwise requires,—

(a)      “Act” means the Petroleum and Natural Gas Regulatory Board Act, 2006;

(b)      “appointed day” means the date of October 1, 2007 when the Central Government notified the establishment of the Petroleum and Natural Gas Regulatory Board;

(c)      “authorized area” means the specified geographical area for a city or local natural gas distribution network (hereinafter referred to as CGD network) authorized under these regulations for laying, building, operating or expanding the CGD network which may comprise of the following categories, either individually or in any combination thereof, depending upon the criteria of economic viability and contiguity as stated in Schedule A, namely:—

(i)           geographic area, in its entirety or in part thereof, within a municipal corporation or municipality, any other urban area notified by the Central or the State Government, village, block, tehsil, sub-division or district or any combination thereof; and

(ii)         any other area contiguous to the geographical area mentioned in sub-clause (i);

(d)      “Board” means the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of Section 3 of the Act;

(e)      “City Gate Station” (hereinafter referred as CGS) means the point where custody transfer of natural gas from natural gas pipeline to the CGD network takes place;

[1][(f) “contract year” means a period of twelve months commencing on and from the first date of the calendar quarter immediately following the date of authorisation and subsequent periods of twelve months each thereafter]

(g)   “development of a CGD network” means laying, building, operating or expanding a city or local natural gas distribution network;

[2][(ga) “Force Majeure” shall mean and be limited to

(i)           war/hostilities;

(ii)         major riots or civil commotion;

(iii)       earthquake, flood, tempest, lightening or other natural physical disasters;

(iv)       restrictions imposed by Central Government or State Governments, that have arisen after last date of submission of bid, which prevents or delays the execution of obligations under these Regulations

[3][***]

[4][***]

(i)    “piped natural gas” (hereinafter referred as PNG) means natural gas transported through pipelines [5][or cascades or any other permitted mode] in a CGD network for consumption by any customer in domestic, commercial or industrial segments and includes natural gas supplied to an online CNG station before its compression.

[6][(ia) “pre-determined penalty” means penalty leviable or levied at the pre-determined rates as specified in Regulation 16 for under_achievement of work programme in each contract year;

(ib) “successful entity” means the entity which submits bid and is granted the authorisation for the development of CGD network for a particular geographical area and the remaining entities submitting the bid for such development and not granted authorisation are referred to as “unsuccessful entities”;

(ic)   “transportation rate for CGD” means the unit rate of tariff (excluding statutory taxes and levies) in rupees per million British Thermal Units (Rs./MMBTU) for all the categories of customers of natural gas in a CGD network to be paid by an entity to the entity authorised to operate the CGD network;

(id) “transportation rate for CNG” means a charge (excluding statutory taxes and levies) in rupees per kilogram (Rs./kg) for online compression of natural gas into compressed natural gas (herein after also referred to as CNG) for subsequent dispensing to customers in a [7][CNG station] to be paid by an entity to the entity authorised to operate the CGD network

[8][(ie) “work programme”, until issuance of authorisation letter, means number of domestic PNG connections, number of CNG stations and Inch-kilometer of steel pipeline network as quoted by the bidder in the bid and after such issuance means number of domestic PNG connections, number of CNG stations and Inch-kilometre of steel pipeline network as mentioned in the authorisation letter as per Schedule-D;]

[9][*****]

(2)     Words and expressions used and not defined in these regulations, but defined in the Act or in the rules or regulations made thereunder, shall have the meanings respectively assigned to them in the Act.

Regulation - 3. Application.

(1)     These regulations shall apply to an entity which is laying, building, operating or expanding, or which proposes to lay, build, operate or expand a CGD network.

(2)     A CGD network shall be designed to operate at a pressure as specified in the relevant regulations for technical standards and specifications, including safety standards for maintaining the volumes of supply of natural gas on a sustained basis to meet the following requirements, namely:—

(a)      customers having requirement of natural gas upto 50,000 SCMD shall be supplied through the CGD network;

[10][Provided that until CGD Network is ready to supply natural gas to a customer (other than domestic PNG and CNG), such customers shall have right to get the supply of natural gas from any other alternate source or supplier, with prior permission of the Board, and if, once CGD Network is ready to supply natural gas to such customer, then, such customer shall cease to get supply of natural gas from such alternate source or supplier after 30 days of receipt of notice of readiness from the CGD network.]

(b)      customers having requirement of natural gas more than 50,000 SCMD and upto 100,000 SCMD shall be supplied, [11][at the discretion of customer]—

(i)       through the CGD network; or

(ii)      through a pipeline not forming part of the CGD network;

(c)      customers having requirement of natural gas more than 100,000 SCMD shall be supplied through a pipeline not forming part of the CGD network.

Regulation - 4. [Initiation of proposal through expression of interest route orsuo-motuby Board.

(1)     An entity desirous of laying, building, operating or expanding a CGD network shall submit an expression of interest to the Board in the form of an application at Schedule B along with an application fee as specified under the Petroleum and Natural Gas Regulatory Board (Levy of Fee and Other Charges) Regulations, 2007.

(2)     The Board may suo-motu invite bids from entities interested in laying, building, operating or expanding a CGD network for any specified geographical area.

Regulation - 5. Criteria for selection of entity for expression of interest route.

(1)     The Board may carry out a preliminary assessment of the expression of interest with respect to the following, namely:—

(a)      natural gas availability position;

(b)      possible connectivity with an existing or proposed natural gas pipeline for supply of natural gas to the city gate of the proposed CGD network, including LNG supplies by tank trucks or tank wagons and CNG by cascades; and

(c)      any other relevant issue as the Board may consider necessary.

(2)     The Board may, within fifteen days of the receipt of expression of interest and based on its preliminary assessment, either issue an open advertisement in at least one national and one vernacular daily newspaper (including webhosting) publishing receipt of an expression of interest and commencement of public consultation process period of thirty days or reject the expression of interest:

Provided that in case the Board rejects the expression of interest, it shall inform the entity of the decision along with the reasons for rejecting the expression of interest.

(3)     During the period of public consultation process, any person or entity may submit in writing to the Board its views, if any, on the expression of interest.

(4)     The Board may, based on the views received and taking into consideration the criteria specified in Schedule A, decide or fix the authorized area for the proposed CGD network, including the decision whether it should be different from that indicated in the expression of interest.

(5)     The Board may, within a period of fifteen days after the end of the public consultation process period, publish through an open advertisement in at least one national and one vernacular daily newspaper (including webhosting), the proposal for the development of CGD network and invite bids for the same.

(6)     The Board shall scrutinize the bids received in response to the advertisement in respect of only those entities which fulfill the following minimum eligibility criteria, namely:—

(a)      entity has paid the application fee along with the application-cum-bid as (3) specified under the Petroleum and Natural Gas Regulatory Board (Levy of Fee and Other Charges) Regulations, 2007:

Provided that the entity submitting the bid, which has already paid the application fee at the time of submission of the expression of interest shall not pay the application fee at this stage unless there is a requirement to pay additional application fee on account of change in the authorized area;

(b)      entity is technically capable of laying and building CGD network as per the following qualifying criteria, namely:—

(i)       entity has on its own in the past laid and built either a [12][hydrocarbon steel pipeline] of a length not less than three hundred kilometers on a cumulative basis or a CGD network; [13][or]

(ii)      entity has a joint venture with another entity (with at least eleven percent equity holding by that entity) which in the past has laid and built either a [14][hydrocarbon steel pipeline] of a length not less than three hundred kilometers on a cumulative basis or a CGD network; [15][or]

(iii)     entity intends to lay and build proposed city or local gas distribution network on lump sum turnkey or project management consultancy basis through one or more technically competent firms which in the past have laid and built either a [16][hydrocarbon steel pipeline] of a length not less than three hundred kilometers on a cumulative basis or a CGD network and the entity shall also enclose a list of such firms along with aforesaid proof of their technical competence:

Provided that the entity shall have the freedom to choose from amongst such firms at the time of execution of the project and the Board reserves the right to cross verify the credential of the firms included in the list and seek any clarifications; or

(iv)    entity has an adequate number of technically qualified personnel with experience in construction, pre-commissioning and commissioning of [17][hydrocarbon steel pipelines] and also has a credible plan to independently undertake and execute the CGD project on a standalone basis.

Explanation.— The entity shall have at least three technically qualified personnel on its permanent rolls having experience of not less than [18][three year] in the following areas, namely:—

(i)       right of way acquisition or clearance securing;

(ii)      design and execution of a [19][hydrocarbon steel pipeline] project;

(iii)     pre-commissioning including hydro-testing and restoration; and

(iv)    safety of [20][hydrocarbon steel pipeline] and installations;

(c)      entity is technically capable of operating and maintaining a CGD network as per the following qualifying criteria, namely:—

(i)       entity on its own has an experience of at least one year in operations and maintenance of a CGD network; [21][or]

(ii)      entity has a joint venture with another entity (with eleven percent holding of that entity) which has an experience of at least one year in operations and maintenance of a CGD network; [22][or]

(iii)     entity intends to operate and maintain the proposed CGD network through an appropriate technical assistance agreement for a period of at least one year with another party having experience of at least one year in operations and maintenance of a CGD network; or

(iv)    entity has an adequate number of technically qualified personnel with experience in commissioning, and operation and maintenance (O&M) of [23][hydrocarbon steel pipelines] and also has a credible plan to independently undertake the O&M activities for a CGD project on a standalone basis.

Explanation.—

(1)     In relation to sub-clause (iii),—

(a)      the entity shall submit in its application-cum-bid an exhaustive list of proposed firms with whom it desires to have a technical assistance agreement along with the proof of relevant and credible experience of such firms and the entity may choose a firm or more from amongst the firms in this list for operation and maintenance of the proposed CGD network and the Board reserves the right to cross verify the credential of the firm or firms included in this list and seek any clarifications;

(b)      the entity shall also submit a credible plan along with the bid to develop an in-house O&M team for city or local gas distribution network.

(2)     In relation to sub-clause (iv), the entity shall have at least three technically qualified personnel on its permanent rolls having experience of not less than [24][three year] in the following areas, namely:—

(a)      commissioning of a [25][hydrocarbon steel pipeline];

(b)      operation and maintenance of natural gas pipelines and natural gas installations including gas compressors;

(c)      commercial issues including gas pricing, gas measurement, accounting, billing and collection; and

(d)      safety of natural gas infrastructure;

(e)      the entity has agreed to abide by the relevant regulations for technical standards and specifications, including safety standards;

(f)       the entity has adequate financial strength to execute the proposed project, operate and maintain the same in the authorized area and shall meet the following financial criterion to qualify for bidding for a single CGD network, namely:— [26][

[28][[29][(i) Net-worth of a bidder entity shall be computed as per Schedule-K.]

[30][****]]

[31][***]

[32][(f) the entity, on being declared as a successful bidder and not being a company registered under the Companies Act, 1956 or Companies Act, 2013, shall get itself registered as a company under the Companies Act, 2013 within six months from the date of such declaration:]

(g)   the entity should have a credible plan for sourcing natural gas for supply in the proposed CGD network;

(h)   entity shall furnish a bid bond [33][in the form of Bank Guarantee] [34][or demand draft or pay order from any scheduled bank drawn in favour of the Petroleum and Natural Gas Regulatory Board payable at New Delhi] for an amount equal to—

(i)       rupees fifty million for a population of five million and proportionately higher amount for population of more than five million.

Illustration.— The bid bond [35][in the form of Bank Guarantee] [36][or demand draft or pay order from any scheduled bank drawn in favour of the Petroleum and Natural Gas Regulatory Board payable at New Delhi] in case of population of the city or local area of twelve million shall be rupees one hundred twenty 120 million (that is, rupees fifty million × 12/5);

(ii)      rupees thirty million for a population of one million and more but less than five million;

(iii)     rupees twenty million for a population of half a million and more but less than one million;

(iv)    rupees fifteen million for a population of quarter of a million and more but less than half a million;

(v)      rupees ten million for a population of one-tenth of a million and more but less than quarter of a million;

(vi)    rupees five million for a population less than one-tenth of a million;

[37][(i) entity submitting the bid should not have been imposed any penalty under Section 28 or punished under Chapter IX of the Act during the period of preceding one year from the last date for submission of the bid]

(j)    in case the entity submitting the bid does not fulfill the requirements of any criteria under clauses (a) to (i), the bid submitted by it shall be summarily rejected and a communication in this regard shall be sent to it and the financial bid shall not be opened for that entity;

(k)   the bid bond shall be—

(i)       encashed if an entity submitting the bid walks out;

(ii)      released in respect of the unsuccessful entity submitting the bid;

(iii)     retained till the prescribed performance bond is furnished at the time of authorization by the successful bidder.

(7)     The application-cum-bid shall be submitted in two parts in the form as specified in Schedule C in separate properly earmarked and sealed envelopes, namely:—

[38](a) Part I [Technical bid] covering general particulars of the entity and technical details of the project including minimum eligibility criteria under sub-regulation (6);]

(b)   Part II (Financial bid) covering the financial details under Regulation 7.

(8)     A time period of [39][[40][ninety] days] shall be allowed for submission of the application-cum-bid for grant of authorization for laying, building, operating and expanding the CGD network and any application-cum-bid received after the notified [41][date and time] shall not be considered.

[42][***]

[43][***]

Regulation - 6. Invitation by Board for laying, building, operating or expanding of CGD network.

The Board may suo-motu form a view regarding the development of a CGD network in a specific city or a geographic area, and in such a case, the procedure as specified in Regulation 5 (except aspects relating to the expression of interest [44][***]) shall apply.

Regulation - 7. Bidding criteria.

(i)       The Board, while considering the proposal for authorization, shall tabulate and compare all financial bids meeting the minimum eligibility criteria, as per the bidding criteria given below, namely:—

[45][(a) The Board, while considering the proposal for authorisation, shall tabulate and compare all financial bids meeting the minimum eligibility criteria, as per the bidding criteria specified below, namely:—

[47][Provided that in the case of the geographical areas of (i) Bilaspur, Hamirpur and Una District; (ii) Panchkula (except area already authorised), Shimla, Solan and Sirmaur Districts, (iii) Barmer, Jaisalmer and Jodhpur Districts, (iv) Darjeeling, Jalpaiguri & Uttar Dinajpur Districts and (v) Nainital and Bijnor Districts, it is not mandatory to supply natural gas through steel-pipes. However, natural gas has to reach in all charge areas. The bidding parameters and their respective weightage will, accordingly, be as under-]

(b)   Successful bidder shall be required to achieve the year-wise work programme within 8 contract years as per details given below, namely:—

[50][Provided that in the case of the geographical areas of (i) Bilaspur, Hamirpur and Una Districts; (ii) Panchkula (except area already authorised), Shimla, Solan and Sirmaur Districts, (iii) Barmer, Jaisalmer and Jodhpur Districts, (iv) Darjeeling, Jalpaiguri and Uttar Dinajpur Districts and (v) Nainital and Bijnor Districts, the successful bidder shall be required to achieve the year-wise work programme within 10 contract years as per details given below, namely:—]

[52][***]

[53][(3) Bidder entity with the highest composite score, considering the criteria under sub-regulation (1) and as illustrated in Schedule C (1), shall be declared as successful bidder.

be decided based on the highness of numbers of PNG connections among the tied bidding entities. In case there is tie on number of PNG connections also, highness of inch-kilometer steel pipeline shall be considered and thereafter in case of tie in inch-kilometer as well, highness of numbers of [54][CNG stations] shall be considered]

[55][***]

Regulation - 8. [Fixation and recovery of Transportation rate for CGD and CNG.

(1)     The transportation rate for CGD shall be fixed as per the transportation rate for CGD bid under sub-regulation (1) of Regulation 7 for first contract year and shall be recovered from an entity by the entity authorised to operate the CGD network for using the network as common carrier or contract carrier. The transportation rate for natural gas from second contract year and onwards shall be determined in accordance with methodology as per Note - 1 to the table in sub-regulation (1) of Regulation 7.

(2)     The transportation rate for CNG shall be fixed as per the transportation rate for CNG bid under sub-regulation (1) of Regulation 7 for first contract year and shall be recovered from an entity by the entity authorised to operate the CGD network for using the network as common carrier or contract carrier. The transportation rate for CNG from second contract year and onwards shall be determined in accordance with methodology as per Note - 1 to the table in sub-regulation (1) of Regulation 7.

(3)     On declaration of a CGD network as common carrier or contract carrier, the authorised entity shall provide access on demand to any other entity and recover the transportation rates for CGD and CNG separately from an entity accessing the CGD network through an invoice without any premium or discount on a non-discriminatory basis.

(4)     Any cost subsequent to the online compression of natural gas into CNG, such as, towards storage and transportation of CNG in a cascade mounted system to a [56][CNG station] is an activity associated with the dispensation of natural gas and is not covered under these regulations.][57]

Regulation - 9. Performance bond.

[58][(1) Grant of authorisation shall be issued to the successful entity after it furnishes the performance bond in the form of demand draft or pay order or bank guarantee from any scheduled bank for the amount as per details given below, namely:—

In case the performance bond is submitted through bank guarantee, the performance bond guarantee (PBG) shall be valid initially for a period of three years and thereafter shall be renewed, at least three months before expiry of the same, for next three years and so on until the period of authorisation. It is the responsibility of the entity to timely renew the PBG and in case the PBG is not so renewed at least one month before expiry of the PBG, the PBG shall be encashed by the Board and the authorisation may be terminated. PBG amount shall be reduced to the value of 40% of the initial PBG furnished by the successful bidder after 100% achievement of the work programme or on expiry of exclusivity from purview of common carrier or contract carrier, whichever is later.]

[59][***]

[60][(3)] The performance bond has been prescribed for guaranteeing the timely commissioning of the proposed CGD network as per the prescribed targets and also for meeting the service obligations by the selected entity during the operating phase of the project.

Regulation - 10. Grant of authorization.

[61][(1) The successful entity shall be issued a letter of intent (LOI) upon finalisation of the bid. The entity shall be required to furnish performance bond within 30 days of issue of LOI and complete such other formalities as may be required by the Board. Upon furnishing the performance bond and completion of such other formalities, the authorisation shall be granted to the successful entity, in the format given in Schedule D, within 30 days;

Provided that the Board may extend the date for submission of performance bond for a period not exceeding 15 days, failing which LOI shall be deemed to have been withdrawn or cancelled.

Provided further that in case of non-submission of performance bond within the stipulated time, the bid bond shall be forfeited or encashed and such bidder entity shall be considered at default and shall be barred for a minimum period of three years from bidding. Further, the process of issuance of LOI and grant of authorisation to the bidder entity with second highest composite score shall be carried out in the same manner as specified in sub-regulation (3) of Regulation 7.]

(2)   The grant of authorization is subject to the entity achieving a firm natural gas tie-up and a financial closure as per Regulation 11.

[62][(3) The grant of authorisation to the entity shall not be assigned by way of sale, transfer or any other manner or surrendered to or in favour of any person or entity during the period of five years from the date of its issue or till the achievement of work programme, whichever is earlier;

Provided that there shall be no bar on the entity on transferring less than fifty per cent equity shares during such period of five years from the date of authorisation or until the achievement of work programme, whichever is earlier, subject to the condition that the lead partner of the original consortium or joint venture shall hold not less than the percentage stake lower than any other partners. The lead partner shall be declared upfront in the bid.

No restructuring of the entity is allowed after submission of the bid and before issuance of Grant of Authorization.

Provided also that the Board may accept transfer of authorisation by the entity to its wholly owned subsidiary company, subject to the condition that the entity provides to the Board a corporate guarantee, in a form specified at Appendix III.]

(4)   The entity intending to renunciate the authorization in favour of another entity after the end of the [63][five years or till achievement of cumulative work programme to be achieved by the end of five contract years, whichever is later] shall submit a proposal to the Board at least thirty days in advance and shall provide all information as may be called for by the Board.

(5)   The Board after satisfying itself that the proposal will not adversely affect the existing or proposed activities of laying, building, operating or expansion of the CGD network shall either accept the proposal in full or with such modifications as it may deem fit and in a case where the entity is permitted by the Board to take over the activities of laying, building, operating or expanding the CGD network such entity shall abide by the existing or modified terms and conditions of the authorization including compliance with the service obligations and adherence to the quality of service standards:

Provided that the Board reserves the right to reject the proposal in public interest and in such a case the Board shall provide in writing the reasons for such rejection.

Regulation - 11. Natural gas tie-up and financial closure.

[64][(1) The entity authorised under Regulation 10 shall enter into and submit to the Board, a natural Gas Sale Agreement (GSA) or Heads of Gas Sale Agreement (HOA) or Memorandum of Understanding for sale of natural gas (MOU) with producer or marketer of natural gas for the proposed CGD network project, in a transparent manner and on an arm's length basis for a minimum period of five years, within one hundred and eighty days from the date of the authorisation.

Provided that no such GSA or HOA or MOU would be required under this sub-regulation in case the central government allocates the natural gas to the entity for the proposed CGD network project within 180 days from the date of authorisation.]

[65][(2) The minimum volume of natural gas for which GSA or HOA or MOU referred to in sub-regulation (1) shall be entered, shall be equal to the volume computed by assuming the consumption of 5 SCM per month for each PNG connection and 75,000 SCM per month for each CNG station considering the cumulative work programme for first five contract years]

[66][(3) The authorized entity shall obtain the financial closure of the project from a bank or financial institution along with firm natural gas supply agreement within a period of [67][two hundred and seventy] days from the date of grant of authorization.]

(4)   In case of an internally financed project, the entity shall submit the approval of its Board of Directors' for the detailed feasibility report (hereinafter referred as DFR) of the project along with its financial plan within [68][two hundred and seventy days] of the authorization:

Provided that the Board may ask the entity to submit any further details or clarifications on the financial closure.

[69][Provided further that financial closure shall mean a legally binding commitment of equity holders and debt financiers to provide or mobilize funding for the first phase of the CGD project which should not be less than ninety percent of the project cost to be incurred for the first five years of the CGD network.]

(5)   In case the entity fails to meet the requirements at sub-regulations (1) to (4), the authorization of the entity for laying, building, operating or expanding CGD network shall be cancelled and the performance bond shall be encashed and the Board reserves the right to re-award the authorization in a transparent manner and the entity shall have no right whatsoever against the Board for seeking any compensation or remedy on this account.

[70][Provided that before taking any action under this sub-regulation the Board shall issue a notice to the defaulting entity allowing it a reasonable time to fulfill its obligations under sub-regulation (1) to (4) and in case the entity takes remedial actions to the satisfaction of the Board within such period, no action shall be taken against the entity under this sub-regulation.]

[71][(6) Notwithstanding anything contained in any other regulations made under the Act,—

(a)      the pipeline entity shall provide connectivity or access of the pipeline to CGD authorised entity at reasonable cost within 180 days, where connectivity or access can be provided from Sectionalising Valve station, and within 270 days from any other point on the pipeline, from date of submission of request for the same.

(b)      after completion of exclusivity period from the purview of “Common Carrier or Contract carrier” for the geographical area, the CGD authorised entity shall provide connectivity or access of their infrastructure to another desirous entity within 270 days of submission of request for the same at reasonable cost.

Explanation.—For the purpose of this sub-regulation, reasonable cost shall mean actual expenditure incurred and additional eighteen per cent of such expenditure to cover overheads, interest and profits.]

Regulation - 12. Exclusivity period.

[72][(1) The exclusivity period to lay, build, operate or expand a city or local natural gas distribution shall be as per the provisions in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.

(2)   Notwithstanding anything contained in any other regulation made under the Act, the exclusivity from purview of common carrier or contract carrier shall be eight years;

Provided that in case an entity timely achieves the work programme in each of the eight contract years, such exclusivity shall be extended by a period of two years.

Provided further that in case an entity is not able to timely achieve the work programme in any of the eight contract years but is successful in timely achieving the cumulative work programme at the end of the eighth contract year, such exclusivity shall be extended by a period of one year.

Provided also that in case flow of natural gas in the designated transmission pipeline is delayed for a period beyond three months from the scheduled date as indicated and is also later than the date CGD network is ready to take gas for reasons not attributable to the authorized CGD entity selected through the bidding process, the Board may extend the exclusivity period for exemption from the purview of common carrier or contract carrier by a period corresponding to the difference in the actual and scheduled natural gas flow in the transmission pipeline serving the authorized geographical area or the date when CGD network is ready to take gas, whichever is less, after assessing the reasons for such a delay and in case, the year-wise targets in respect of domestic piped natural gas connection, [73][CNG stations] and inch-kilometer of steel pipeline as well as schedule of levying transportation rate for CGD and transportation rate for CNG shall also be shifted accordingly by the Board. Further, the exclusivity period for laying, building or expanding the CGD network as stipulated shall also be extended by the same period. For the purpose of monitoring progress of committed targets, the same shall be prorated in the effected years.

Explanation.—For the purpose of this sub-regulation, it is clarified that, the exclusivity for laying, building or expansion of CGD networks, in all cases, shall remain twenty-five years from the date of authorisation.]

Regulation - 13. Post-authorization monitoring of activities (pre-commissioning).

[74][(1) a authorized entity shall provide, on a monthly and quarterly basis, a progress report detailing the clearances obtained, targets achieved, expenditure incurred, works-in-progress and other relevant information in the forms at Schedule E as per formats E-1A-CGD, E-1B-CGD for quarterly reports and E-2-CGD, E-3-CGD and E-4-CGD for monthly reports.]

(2)   The Board shall seek compliance by the entity to the relevant regulations for technical standards and specifications, including safety standards through conduct of technical and safety audits during the commissioning phase as well as on an on-going basis thereafter for ensuring safe commissioning and operation of the CGD network.

(3)   The Board shall monitor the progress of the entity in achieving various targets with respect to the CGD network project, and in case of any deviations or shortfall, advise remedial action to the entity.

[75][(4) An authorized entity shall designate an official of the entity for submitting data/information to the Board and intimate the same to the Board. Any change in the designated official shall be communicated to the Board by the authorized entity within 7 working days.]

Regulation - 14. Service obligations of authorized entity (post commissioning).

[76][(1) The entity may take an interest-free refundable security deposit from domestic PNG Customer towards security of the equipments and facilities mentioned below, including the labour cost of installation towards last mile connectivity, that is, between the riser isolation valve before the metering unit and the suraksha hose pipe connecting the burner in the customer's premises for an amount not exceeding “rupees six thousand” for a single connection, namely:—

(a)      riser isolation valve before the metering unit;

(b)      ten meters of pipe up to the metering unit;

(c)      metering unit;

(d)      five meters of pipe or tube from the metering unit up to the excess flow check valve-cum-isolation valve;

(e)      excess flow check valve-cum-isolation valve; and

(f)       suraksha hose pipe of standard size connecting the domestic PNG burner

Provided that the network tariff bid by the entity shall include the charges towards the last mile connectivity: Provided further that the amount of “rupees six thousand” referred to in this sub-regulation shall be deemed to have been substituted by the amount of “rupees nine thousand” in case the entity installs a smart meter at the premises of the domestic PNG Customer:

Provided also that it shall be the option of the domestic PNG customer to choose either the smart meter or the normal meter and the entity shall not force him to opt for the smart meter or to withhold providing the domestic PNG connection for the reason that the customer has not opted for the smart meter:

Provided also that an existing domestic PNG customer shall have the option to seek replacement of existing normal meter by a smart meter on payment of rupees three thousand to the entity.

Explanation.—

(1)     The domestic PNG customer shall bear the actual cost of the material and labour charges for pipe and the tubing in excess of the length specified above.

(2)     The domestic PNG customer shall pay the actual cost of installation including labour charges from the common metering unit onwards for connecting another domestic PNG burner or any other gas-based appliance in the same premises.

(3)     A meter shall be considered to be a smart meter for the purpose of this regulation if it has—

(i)       an in-built feature of sending the meter reading and diagnostic data to the entity in a two way communication between the entity and the customer;

(ii)      a pre-paid charging facility enabling the customer to recharge the meter through various payment options; and

(iii)     an inbuild shut-off valve which stops gas supply once the balance goes below the set minimum or above the maximum credit limit]

(2)   The entity may take an interest-free refundable security deposit from non-domestic PNG customers for an amount not exceeding the actual cost of the metering unit and other related equipment and labour charges towards installation:

Provided that these are installed by the entity in the customer's premises.

(3)   The entity shall not exert any undue influence on any domestic PNG customer to purchase natural gas burner stove or avail of any other service not connected with the supply of natural gas.

(4)   The entity shall convert the existing LPG burner stove of a prospective domestic PNG customer into natural gas burner stove free of charge.

(5)   The authorized entity shall maintain separate books of accounts including detailed activity-based costing records to segregate direct, indirect and common costs along with the basis of allocation and the revenues earned in respect of the activities of—

(a)      purchase of natural gas including its odourization;

(b)      transportation of natural gas in the CGD network;

(c)      online compression of natural gas into CNG;

(d)      transportation of CNG in a cascade mounted system, if any;

(e)      marketing or distribution including commission allowed to any agency for marketing or distribution of natural gas and CNG in the CGD network; and

(f)       dispensing of CNG including booster compression, if any.

(6)   The costs and revenues associated with activities other than those stated in clauses (a) to (f) of sub-regulation (5) should be reflected separately in the books of accounts of the entity.

(7)   The authorized entity shall ensure that—

[77][(a)] the confidentiality of customer information collected in the course of providing regulated service is maintained; and

[78][(b)] there is no preferential access allowed to itself or to any other entity for the activity of transportation of natural gas in the CGD network.

(8)   The authorized entity shall be responsible for getting the technical and safety audits carried out by independent technical experts or accredited agencies out of the panel approved at regular intervals during the commissioning phase as well as on an on-going basis thereafter to ensure compliance with the relevant regulations for technical standards and specifications, including safety standards and the audit report along with the findings shall be submitted to the Board and the Board may review the same and advise remedial action, if any, to the entity.

(9)   The entity will have to meet the service obligations as stated under the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.

[79][(10) An authorized entity shall continue to submit post commissioning information in the forms at Schedule E as per formats E-1A-CGD, E-1B-CGD for quarterly reports and E-2-CGD, E-3-CGD and E-4-CGD for monthly reports.]

[80][(11) In the event of authorised entity being rendered unable to perform any obligation required to be performed by it as per the work program, due to force majeure, the relative obligation of the entity affected by such force majeure shall be suspended for the period during which such force majeure lasts and the decision of the Board in this regard shall be final and binding on the entity.

(12) Upon the occurrence of such force majeure and upon its termination, the entity alleging that it has been rendered unable as specified in sub-regulation (11), the entity must inform the Board giving full particulars of the force majeure and duly certified by statutory authorities, the beginning and end of the delay due to such force majeure immediately but not later than 15 days from the end of such force majeure.

(13) Time for performance of the relative obligation suspended by such force majeure shall stand extended by the period during which such force majeure lasts.]

Regulation – 15.

[81][***]

Regulation - 16. [Consequences of default, pre-determined penalties and termination of authorisation procedure.

(1)     An authorised entity shall abide by all the terms and conditions specified in these regulations and any failure in doing so shall be dealt in accordance with the provisions of this regulation.

(2)     Pre-determined penalty shall be levied and recovered from the entity within three months from the end of each contract year in respect of any shortfall in achieving cumulative work programme targets for that contract year computed at the rates specified below without any notice, namely:—

(a)      for shortfall in achieving cumulative work programme target for each PNG connection - Rs. 750 (Rupees Seven hundred and fifty only);

(b)      for shortfall in achieving cumulative work programme target for each inch-kilometer of steel pipeline - Rs. 150,000 (Rupees one lakh and fifty thousand only); and

(c)      for shortfall in achieving cumulative work programme target for each [82][CNG station] - Rs. 20,00,000 (Rupees twenty lakh only);

and for the purpose of illustration, if the cumulative target in respect of PNG connections is 28,000 at the end of third contract year and cumulative achievement at the end of that year is 24,000, then, a pre-determined penalty of Rs. 30,00,000 [i.e. (Rs. 750 × (28,000 - 24,000)] shall be levied within 3 months from the end of third contract year. Similar penalty shall be levied for inch-kilometer of steel pipeline and [83][CNG stations], in respect of each contract year.

Provided that penalty shall be applicable for default in each contract years and first deduction shall be started from second contract year onwards.

Provided further that due cognizance of force majeure duly accepted by the Board shall be taken in computing the pre-determined penalty.

(3)     In case of a failure, other than those specified in sub-regulation (2), the following procedure shall be followed, namely:

(a)      the Board shall issue a notice to the defaulting entity allowing it a reasonable period to fulfill its obligations;

(b)      no punitive action shall be taken in case remedial action is taken by the entity to the satisfaction of the Board within such period, otherwise, following penalty shall be levied on the entity by the Board, namely:—

(i)       up to an amount equal to 10% of the performance bond amount for the first default; and

(ii)      up to an amount equal to 25% of the performance bond amount for each of the subsequent defaults.

(4)     Any penalty levied under sub-regulation (2) or sub-regulation (3) shall initially be recovered by encashment of the performance bond. The entity shall be required to make good the performance bond to its full value within thirty days of encashment. If the entity fails to make good the performance bond within such period, the Board shall encash the remaining amount of the performance bond and may also terminate the authorisation.

(5)     In case the cumulative achievement of any entity for a CGD network at the end of three contract years in a geographical area falls short of 30% of the weighted average of the cumulative work programme (computed as illustrated in this sub-regulation) in respect of PNG connections, inch-kilometer of steel pipeline and number of [84][CNG stations], or if in the opinion of the Board the entity has made a serious default in complying with the provisions of the Act or rules or regulations made thereunder or terms and conditions of the authorisation under these regulations, the Board may give a show cause notice to the entity asking it why its such authorisation should not be terminated due to the said default, and after giving it a reasonable opportunity of being heard, terminate the authorisation and encash 100% of the performance bond.

Illustration.— If an entity achieved 10,000 PNG connections, 100 inch-kilometer of steel pipeline and set up 2 CNG station against the target of 30,000 PNG connections, 500 inch-kilometer of steel pipeline and 4 CNG station at the end of third year, then its weighted average of the cumulative work programme will be calculated as tabulated below, namely:—

(6)     Without prejudice to sub-regulation (1) to (5), the Board may also levy civil penalty under Section 28 of the Act in addition to taking action as provided for offences and punishment under Chapter IX of the Act.][85]

Regulation - 17. Entity authorized by the Central Government for laying, building, operating or expanding CGD network before the appointed day.

(1)     The entity shall submit relevant information along with supporting documents in the form as in Schedule H within a period of one hundred and eighty days from the appointed day.

(2)     The entity shall abide by the terms and conditions of the authorization by the Central Government including obligations, if any, imposed by the Central Government.

(3)     The entity shall abide by the relevant regulations for technical standards and specifications, including safety standards and the quality of service standards [86][***].

(4)     The Board may consider grant of exclusivity on such terms and conditions as per the provisions in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.

[87][(5) The transportation tariff shall be as determined by the Board as per regulation under Section 22 of the Petroleum and Natural Gas Regulatory Board Act, 2006.]

(6) The activities of the entity may be subject to such other regulations as may be applicable as per the provisions of the Act.

Regulation - 18. Entity not authorized by the Central Government for laying, building, operating or expanding CGD network before the appointed day.

(1)     An entity laying, building, operating or expanding a CGD network at any time before the appointed day but not duly authorized to do so by the Central Government shall apply immediately for obtaining an authorization in the form as at Schedule I.

(2)     The Board may take into consideration the following criteria while considering the application for grant of authorization, namely:—

(a)      the entity meets the minimum eligibility criteria as [88][***] specified in clauses (a) to (e) and (i) of sub-regulation (6) of Regulation 5 before the appointed date and is possessing all necessary statutory clearances, permissions, no objection certificates from the Central and State Governments and other statutory authorities;

(b)      an entity which is not registered under the Companies Act, 1956 at the time of submitting the application for grant of authorization shall undertake to become a company registered under the Companies Act, 1956:

Provided that the Board may exempt an entity to register under the Companies Act, 1956 on such conditions as it may deem appropriate;

(c)      a satisfactory assessment of the actual physical progress made and the financial commitment thereof till immediately before the appointed day in comparison with the entity's DFR appraised by the financial institution funding the project. In case the project has not been funded by any financial institution, the Board may appraise the DFR. The DFR of the entity should clearly indicate the specified geographical area of the project and also specify the coverage proposed for CNG and PNG. In case upon scrutiny of the DFR by the Board by taking into account the geographical area, customer segments, infrastructure requirements, etc. proposed by the entity, the DFR is found to be sub-optimal and unacceptable, the Board may not consider the case of the entity for issuing the authorization;

(d)      in respect of the actual physical progress made and the financial commitment thereof referred to in clause (c), a physical progress of at least twenty five percent and a financial commitment of at least twenty five percent of the capital expenditure identified for the CGD project as per the DFR immediately before the appointed day may be considered as adequate;

(e)      the entity should have arranged, by way of acquisition or lease, land for CGS and procured the necessary equipment for erecting the CGS before the appointed day;

(f)       the Board reserves the right to get the actual physical progress and the financial commitment certified and depending upon the progress achieved, the Board may consider authorizing the entity for the authorized area—

(i)       as per the geographical area in its DFR;

(ii)      as per the geographical area actually covered under implementation till the appointed day; or

(iii)     the geographical area as specified by the Board;

(g)      in relation to laying, building, operating or expanding the CGD network, it is for the entity to satisfy the Board on the adequacy of its ability to meet the applicable technical standards, specifications and safety standards as specified in the relevant regulations for technical standards and specifications, including safety standards and the quality of service standards as specified in Regulation 15;

(h)     assessment of the financial position of the entity in timely and adequately meeting the financial commitments in developing the CGD network project as appraised by a financial institution and an examination of the audited books of accounts of the entity;

(i)       firm arrangement for supply of natural gas to meet the demand in the authorized area to be covered by the CGD network;

(j)       any other criteria considered as relevant by the Board based on the examination of the application.

(3)     The evaluation of the application in terms of the clauses (a) to (j) shall be done in totality considering the composite nature and the inter-linkages of the criteria.

(4)     The Board, after examining the application in terms of the criteria under sub-regulation (2) and also taking into account the requirements in other regulations may form a prima-facie view as to whether the case should be considered for authorization.

(5)     In case of prima-facie consideration, the Board shall issue a public notice in one national and one vernacular daily newspaper (including webhosting) giving brief details of the project and seek comments and objections, if any, within thirty days from any person on the proposal.

(6)     The Board, after examining the comments and objections, if any under sub-regulation (5) may either consider or reject the case for grant of authorization for the CGD network.

(7)     In case it is decided to grant authorization, the same shall be in the form at Schedule D

(8)     In case of rejection of the application, the Board shall pass a speaking order after giving a reasonable opportunity to the concerned party to explain its case and proceed to select an appropriate entity for the project in terms of Regulation 6.

(9)     In case the entity is selected for grant of authorization for CGD network,—

[89][(a) The transportation tariff shall be as determined by the Board as per regulation under Section 22 of the Petroleum and Natural Gas Regulatory Board Act, 2006.]

(b)   the Board may consider grant of exclusivity on such terms and conditions as specified in the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008;

(c)   the entity shall abide by the technical standards, specifications including safety standards as specified under relevant regulations for technical standards and specifications, including safety standards;

(d)   the provisions under Regulations 9, 13, 14, [90][***] and 16 shall apply to the entity.

Regulation - 19.[Power to remove difficulties.

If any difficulty arises in giving effect to any of the provisions of these regulations, the Board may, by general or special order, do anything not being inconsistent with the provisions of the Act, which appears to it to be necessary or expedient for the purpose or removing difficulties.][91]

Regulation - 20. [Miscellaneous.

If any question arises as to the interpretation of these regulations, the same shall be decided by the Board.][92]][93]

Schedule A

[see Regulations 2(1)(c) and 5 (4)]

Basis for defining authorized area for laying, building, operating or expanding CGD network

The specified geographical area in respect of an authorized area for a CGD network as per Regulation 2(1)(c) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 may be determined considering the following criteria of [94][natural gas availability, pipeline connectivity and Geographical Contiguity], namely:—

(1)     [Natural Gas availability and pipeline connectivity.

Geographical area shall either have availability of natural gas or a natural gas pipeline passing within such area or passing in its vicinity or a natural gas pipeline is proposed to be laid either within or in vicinity of such area.][95]

(2)     Geographical contiguity.

For the purpose of any area to be considered as contiguous to the geographical area as per Regulation 2(1)(c) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, such an area shall not have an economic viability to have an independent CGD network on its own.

Note:

The Board reserves the right to intervene during the expression of interest stage itself, if in its opinion the specified geographical area is too large to sustain customer service; or allow safe and convenient operations; or has a potential to restrict competition. In the alternative, the Board may also intervene in case the geographical area considered is too small; or covers only a certain class of customers; or tantamount to cherry-picking. In all such cases, the Board may prescribe a geographical area of a size different than that indicated in the expression of interest.

Schedule B

[see Regulations 4 (1) and 5 (6)]

Application form for submitting expression of interest by an entity desirous of laying, building, operating or expanding a CGD network

(A)     Only an entity which complies with the minimum eligibility criteria as per Regulation 5 (6) of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 is eligible to submit its application for submission of expression of interest to the Board.

(B)     Entities must enclose documentary proof in support of its meeting the minimum eligibility criteria.

(C)     The entity submitting the expression of interest must submit the following information:

 

Date:

Place:

Name and signature of entity or authorized signatory

Official Seal

[96][“Schedule C

[see Regulation 5 (7)]

Application-cum-bid for grant of authorization for CGD network

To,

The Secretary,

Petroleum and Natural Gas Regulatory Board,

Ist Floor, World Trade Centre

Babar Lane, Connaught Place,

New Delhi — 110 001.

Sub: Application-cum-bid for grant of authorization for laying, building, operating or expanding city or local natural gas distribution network in the proposed geographical area of ________ in the State or Union Territory of _________ under the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

(Attach separate sheets for providing information wherever necessary)

[101][

DECLARATION

(1)     Certified that the above information is true to the best of my/our knowledge and belief and the information and data given in the annexure, attachments, enclosures and calculation sheets accompanying this application-cum-bid are correct, complete and truly stated, and if any statement made herein is found to be incorrect, the application-cum-bid shall be rejected, the application fee and the Bid Bond shall be forfeited and I/We shall be liable to be proceeded against and for punishment under the provisions of the Act.

(2)     I/We certify that the above application-cum-bid is the only application-cum-bid submitted and no other application-cum-bid has been or is being submitted separately for this city or local area by me/us.

[104][***]

(3)     [105][We also declare to submit after grant of authorization, all details of the CGD project like DFR (based on which financial approvals are taken), all technical specifications of the project covering full details of pipeline design, pressure, length of network, pipeline diameter, pipeline thickness, route, corrosion protection arrangements, city gate station, natural gas source, tap-off points, main block valves, isolation valves, emergency shutdown valves, odourization facilities, metering arrangements, [106][CNG stations], HSE measures etc.

Date:

Place:

Name and Signature of Entity/Authorized Signatory

Official Seal

Instructions for filling the Application-cum-bid:

(1)     All entries in the form and annexed documents should be legible with no cuttings.

(2)     Details requiring separate statement may be enclosed giving clear reference of the point against which the same is being attached.

(3)     All pages of the application-cum-bid and the attachments and statements need to be serially numbered and initialed by the person or official authorized by the entity through a notarized power of attorney.

(4)     Any information filled in the application-cum-bid needs to be substantiated by attaching relevant proof of the same.

(5)     The entity is required to submit the application cum bid with all enclosures in the manner as specified in the bidding document.

(6)     Incomplete application-cum-bid is liable to be summarily rejected.

(7)     All quoted figures shall be positive numbers.

(8)     The Application cum Bids submitted in response to sub-regulation 5(5), must be accompanied with all enclosures in the manner as specified in the Application cum Bid document, which shall specify in detail the terms and conditions of such bidding.]

Schedule C (1)

[see Regulation 7 (3)]

Illustration showing the basis of determining the highest composite score for ascertaining the successful bid for grant of authorization for CGD network

Let there be three entities whose bids need to be compared for determining the successful bid over the bidding criteria described below—

[107][(A) Transportation rate for CGD

Let,

N1 = Transportation rate for CGD bid by 1st entity

N2 = Transportation rate for CGD bid by 2nd entity

N3 = Transportation rate for CGD bid by 3rd entity

Assume that N1 is lower than N2 and N2 is lower than N3.

The lowest value of transportation rate for CGD (LN1) shall be given a score of 100% and the bid value of other transportation rates for CGD shall be given a score in relation to LN1 on a prorate basis, as under:—

LN1 = 100% for LN1

LN2 = 100% × (N1/N2)

LN3 = 100% × (N1/N3)

(B) Transportation rate for CNG

Let,

C1 = Transportation rate for CGD bid by 1st entity

C2 = Transportation rate for CGD bid by 2nd entity

C3 = Transportation rate for CGD bid by 3rd entity

Assume that C1 is lower than C2 and C2 is lower than C3.

The lowest value of transportation rate for CNG (LCI) shall be given a score of 100% and the bid value of other transportation rates for CNG shall be given a score in relation to LCI on a prorate basis, as under:—

LC1 = 100% for LC1

LC2 = 100% × (C1/C2)

LC3 = 100% × (C1/C3)

[108][(C) Number of CNG Stations to be installed in CGD Network:

Let,

IG1 = value of the CNG stations bid by the 1st entity.

IG2= value of the CNG stations bid by the 2nd entity.

IG3= value of the CNG stations bid by the 3rd entity.

Assume that IG 1 is lower than IG2and IG2 is lower than IG3.

The highest number of the CNG stations bid (HIG3) shall be given a score of 100% and the number of CNG stations of the other bids shall be given a score in relation to HIG3 on a pro-rata basis as under—

HG1= 100 % × (IG1 ÷ IG3)

HG2= 100 % × (IG2 ÷ IG3)

HG3= 100 %]

(D) Inch-Kilometer of steel pipelines

Let,

IK1= inch-kilometer of steel pipelines to be laid as bid by the 1st entity over the period of exclusivity in terms of the exemption from the purview of the contract carrier or common carrier.

IK2= inch-kilometer of steel pipelines to be laid as bid by the 2nd entity.

IK3= inch-kilometer of steel pipelines to be laid as bid by the 3rd entity.

Assume that IK1 is lower than IK2 and IK2 is lower than IK3.

The highest value of the inch-kilometer bid (HIK3) shall be given a score of 100% and the value of the other inch-kilometer bids shall be given a score in relation to HIK3 on a pro-rata basis as under—

HIK1 = 100 % × (IK1 ÷ IK3)

HIK2 = 100 % × (IK2 ÷IK3)

HIK3 = 100 %

[109][(E) Number of PNG domestic connections

Let,

P1 = Number of PNG domestic connections by the 1st entity

P2 = Number of the PNG domestic connections by the 2nd entity

P3 = Number of the PNG domestic connections by the 3rd entity

Assume P1 is higher than P2 and P2 is higher than P3.]

The highest number of PNG domestic connections bid (HP1) shall be given a score of 100% and the number of the other PNG domestic connections bids shall be given a score in relation to HP1 on a pro-rata basis as under—

Now, the composite score of three entities shall be computed by assigning the respective weights assigned to each of the bidding criterion as indicated below—

The entity with the highest composite score shall be declared as successful bidder.”;

[110][Provided that in the case of the geographical areas of (i) Bilaspur, Hamirpur and Una Districts; (ii) Panchkula (Except area already authorised), Shimla, Solan and Sirmaur Districts (iii) Barmer, Jaisalmer and Jodhpur Districts (iv) Darjeeling, Jalpaiguri and Uttar Dinajpur Districts and (v) Nainital and Bijnor Districts, the composite score of three entities shall be computed by assigning the respective weights assigned to each of the bidding criterion as indicated below-]

The entity with the highest composite score shall be declared as successful bidder]

[111][Schedule D

[see Regulations 10 (1) and 18 (7)]

Grant of authorisation for laying, building, operating or expanding CGD network

To,

<Name of the Successful Bidding Entity>

<Address>

Subject: Grant of authorisation for laying, building, operating or expanding CGD network in the authorised geographical area of <______________ > in the State or the Union Territory of <______________ > under the Petroleum and Natural Gas Regulatory Board (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

Sir/Madam,

With reference to your application-cum-bid for grant of authorisation for laying, building, operating or expanding the City Gas Distribution (CGD) network in <name of the authorised area> in the State or the Union Territory of <name>, it has been decided to grant you the authorisation subject to the Petroleum and Natural Gas Regulatory Board (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 and the following terms and conditions, namely:—

(1)     The Authorised Area for laying, building, operating or expanding the proposed CGD Network shall cover an area of < ___________ > square kilometer and as depicted in the enclosed drawing or map,

(2)     The activities of laying, building, operating or expansion of the CGD Network shall commence immediately after the issuance of this authorisation.

(3)     [112][The activities permitted above shall have to be completed as per the work programme mentioned below, namely:—

Serial Number	Description of work	Numbers
1	Number of CNG Stations (Online and Daughter Booster stations) to be installed within 8 contract years from the date of authorization
2	Number of domestic Piped Natural Gas connections to be achieved within 8 contract years from the date of authorisation
3	Inch-km of steel pipeline to be laid within 8 contract years from the date of authorisation

The entity shall be required to achieve the year-wise work programme within 8 contract years as per details given below:

Alternatively,

[113][In the case of the geographical areas of (i) Bilaspur, Hamirpur and Una Districts; (ii) Panchkula (Except area already authorised), Shimla, Solan and Sirmaur Districts (iii) Banner, Jaisalmer and Jodhpur Districts (iv) Darjeeling, Jalpaiguri and Uttar Dinajpur Districts and (v) Nainital and Bijnor Districts, the entity shall be required to achieve the year-wise work programme within 10 contract years as per details given below, namely:—]

(4)     Any failure on the part of the entity in complying with the milestones prescribed in the work programme shall lead to consequences as specified under Regulation 16.

(5)     The entity shall design and install an optimal size of the infrastructure in terms of pipelines of various types including steel belting of the authorised area, online compressors of adequate capacity for compressing of natural gas into CNG, allied equipment and facilities in the CGD network depending upon the potential demand for natural gas. The infrastructure in the CGD network should be adequate to maintain uninterrupted flow of natural gas in the pipelines and be also able to maintain supplies at adequate pressure to online CNG stations.

(6)     The entity shall maintain an uninterrupted supply of natural gas to all categories of customers in the CGD network. In the event of any disruption in the supply of natural gas in the CGD Network, first priority shall be accorded to restoration of supplies to domestic PNG customers. In case of disruption of supply to domestic PNG customers for more than twelve hours, the entity shall compensate the domestic customer on the following manner, namely:—

(a)      the normative volume of natural gas consumption for the first domestic PNG connection for cooking requirements based on last three months weighted average consumption per day to be applied for each day's disruption and multiplied by ten;

(b)      normative value of natural gas consumption shall be based on last three months' weighted average billing price of natural gas for supplies to the first domestic PNG connection for cooking requirements; and

(c)      the value of compensation shall be equal to normative volume of natural gas consumption as per clause (a) above multiplied by normative value as per clause (b) and shall be adjusted by allowing a credit to the domestic PNG Customer in the next billing cycle or in the next pre-paid smart card in case of smart card metering.

In case the disruption of supplies is attributed to any fault of the domestic PNG customer, no compensation shall be payable by the entity.

(7)     The entity is allowed an exclusivity period under the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008, in respect of the following, namely:—

(a)      _____months from the date of issue of this communication for laying, building and expansion of the CGD network; and

(b)      _____months from the date of issue of this communication in terms of an exemption from the purview of common carrier or contract carrier for the CGD network:

Provided that the entity meets the obligations in line with the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008:

Provided further that the period of exclusivity allowed under sub-clause (a) or sub-clause (b) may be terminated before the expiry of the period mentioned above in line with the provisions under Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008.

(8)     The authorised entity shall be required to take prior approval from the Board for creation of any lien, charge or hypothecation of the CGD network to secure finances for the project and furnish details of utilisation of funds. And, in case of raising funds from any financial institution or bank, the entity will be required to only inform the Board of the sanction of the funds within a period of seven days.

(9)     The entity shall submit a detailed and clear financial closure report to the Board within a period of two hundred and seventy days from the date of authorisation issued by the Board under Regulation 10.

(10)   The entity shall publish on its website the transportation rate for CGD and transportation rate for CNG in the authorised area as per the following table namely:—

(11)   The entity shall publish the applicable retail selling price of PNG for all categories of customers and also for the purpose of invoicing in Rs./MMBTU.

(12)   The entity shall publish and display the retail selling price of natural gas for the purpose of invoicing to CNG customers in Rs./Kg at all natural gas dispensing stations.

(13)   The furnishing of performance bond of Rs. ______ Million is a guarantee for timely commissioning of the project as per the prescribed work programme in the bid and for meeting the service obligations during the operating phase of the project.

(14)   The entity shall comply with the applicable provisions under the Petroleum and Natural Gas Regulatory Board (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Networks) Regulations, 2008, relevant regulations for technical standards and specifications, including safety standards, any other regulations as may be applicable and the provisions of the Act.

(15)   In case the authorisation of the entity is terminated, the Board may assign the rights and obligations of the entity to any agency or another entity on such terms and conditions, as it may deem fit. Further, the entity may be required, as per the directions of the Board, to continue the operations of the CGD network at the same level till another agency or entity appointed by the Board takes over the full control of the CGD network.

(16)   The entity shall comply with any other term or condition which may be notified by the Board in public interest from time to time.

You are requested to confirm your acceptance by filling-in the acceptance of the grant of authorisation provided below and return the same in original.

Yours faithfully,

Dated:

Sd/—

Name and Designation of Officer

On behalf of the PNGRB

Official Seal

Acceptance of the Grant of Authorisation

I/We hereby accept the grant of authorisation issued by the PNGRB vide letter ref. < _____> dated <_____ > and agree to comply with all the terms and conditions subject to which I/We have been granted the authorisation for laying, building, operating or expanding city or local natural gas distribution network in the authorised area of _____ in the State or the Union Territory of _____.

Date:

Place:

Signature of the Entity or Authorised Signatory

Name and Official Seal

[114][Schedule E

[see Regulation 13(1) and Regulation 14 (10)]

A: Quarterly submission of data by authorized entity under the regulations shall be made in the following formats appended here below:—

(i)       Format E-1A-CGD for Quarterly Progress Report on CGD: Physical Parameters

(ii)      Format E-1B-CGDfor Yearly Progress Report on CGD: Financial Parameters

(iii)     Format E-1C-CGD for Yearly Progress Report on CGD: Work Program

B: Monthly submission of data by authorized entity under the regulations shall be made in the following formats appended here below:—

(i)       Format E-2-CGD for Monthly Report on PNG Customers

(ii)      Format E-3-CGD for Monthly Report on Progress of CNG

(iii)     Format E-4-CGD for Monthly Report on Sale of Natural Gas

C: The data and information required to be submitted by the entity in the above formats shall be analyzed by the Board by comparing the —actual progress made by the entity versus targets as per terms and conditions of authorization

D: Monitoring of the progress shall be taken up by the Board on a quarterly basis and the notice of deviations and shortfalls, if any, shall be sent to the entity for a prompt resolution. In case of any delay in meeting the yearly commitments within the notice period or in case of repeated violations, the entity may face the consequences specified under Regulation 16 or under Regulation 10 of the Petroleum and Natural Gas Regulatory Board (Exclusivity for City or Local Natural Gas Distribution Network) Regulations, 2008, or both.

E: A Self certification shall be submitted by the entity in terms of its compliance with the requirements of sub-regulation 7 of Regulation 14.

Guidelines for filling of the reports:

(a)      “Contract Year” shall be indicated as “1st Year”/“2nd Year”/“3rd Year” and so forth and so on and “1st Year” means a period of 12 months starting from the first date of the calendar quarter immediately following the date of authorization and subsequent periods of 12 months each thereafter' and “2nd Year” shall be the period of 12 months starting from the first date of the calendar quarter after 1st Year, and so forth and so on.

(b)      “Quarter ending” shall be indicated as Q-1/Q-2/Q-3/Q-4 where “Q-1” means the first quarter of the “Contract Year” and “Q-2” means the second quarter of the “Contract Year and so forth and so on.

Note: The Board reserves the right to seek any information or data from the entity, as it may deem to be fit, to satisfy itself to the compliance by the entity at any point of time

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[115][****]

Schedule G

[see Regulation 16(1)(d)]

Procedure for the termination of grant of authorization of CGD network

The procedure for implementing the termination of the authorization of the entity to lay, build, operate or expand a CGD network following default by the entity as per the provisions of Regulation 16 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008, is as under:

(1)     On approval of termination of the authorization by the Board, the entity shall be required to submit a detailed statement of the ongoing activities in the CGD network, investments, liabilities and such other information as may be directed by the Board within a period of thirty days from the date of receipt of notice of termination by the entity;

(2)     The authorized entity shall be required to continue the operations of the CGD network at the same level till such time another agency or entity, as per the decision of the Board, takes over the full control of the CGD network. The Board reserves the right to appoint any other entity or agency to manage and operate the CGD network till such period of time and on such terms and conditions, as it may deem fit;

(3)     The Board may, in any manner as it deems fit including through an issue of an advertisement, invite expression of interest or bids from entities interested in taking over the management and operation of the CGD network;

(4)     On receipt of expression of interest or bids, as the case may be, the Board may take an appropriate view on the procedure for evaluation and subsequent grant of authorization and an entity shall be selected to take over the operations of the CGD network from the defaulting entity;

(5)     The defaulting entity shall have to provide an undertaking to indemnify the newly authorized entity for any liability which may arise later as a result of its past actions;

Schedule H

[see Regulation 17 (1)]

Information to be provided for CGD network authorized by Central Government before the appointed day

To,

The Secretary,

Petroleum and Natural Gas Regulatory Board,

Ist Floor, World Trade Centre

Babar Lane, Connaught Place,

New Delhi — 110 001.

Sub: Information in respect of CGD network in the city or area of in the State or the Union Territory of

(Attach separate sheets for providing information wherever necessary)

DECLARATION

(1)     Certified that the above information is true to the best of my/our knowledge and belief and the information and data given in the Annexure and statements are correct, complete and truly stated, and if any statement made herein is found to be incorrect, I/We shall be liable for proceeding and for punishment under the provisions of the Act.

(2)     I/we also undertake to provide any further information or data as may be required by the Board within the stipulated time.

Date:

Place:

Name and Signature of Authorized Signatory

Official Seal

Instructions for providing information:

(1)     All entries in the form and annexed documents should be legible with no cuttings.

(2)     Details requiring separate statement shall be provided giving clear reference of the point against which the same is being attached.

(3)     All pages of the information format and all annexure, statements, etc need to be serially numbered and initialed by the person or official authorized by the applying entity through a notarized Power of Attorney.

(4)     Any information or data filled in the information format needs to be substantiated by attaching relevant proof of the same.

(5)     The information format is required to be submitted in five copies with all the enclosures in addition to the original.

(6)     Incomplete information format is liable to be summarily rejected.

Schedule I

[see Regulation 18 (1)]

Application for grant of authorization for CGD network to entities not authorized by Central Government

To,

The Secretary,

Petroleum and Natural Gas Regulatory Board, Ist

Floor, World Trade Centre

Babar Lane, Connaught Place,

New Delhi — 110 001.

Sub: Application for grant of authorization for City or Local Natural Gas Distribution project in the city of ____________________ in the State or the Union Territory of ___________________

(Attach separate sheets for providing information wherever necessary)

 

 

DECLARATION

(1)     Certified that the above information is true to the best of my/our knowledge and belief and the information given as Annexure and statements accompanying this application are correct, complete and truly stated, and if any statement made herein is found to be incorrect, the application shall be rejected, the application fee shall be forfeited and I/We shall be liable for proceeding and for punishment under the provisions of the Act.

(2)     I/We also undertake to furnish a Performance Bond, which may be prescribed by the Board.

(3)     I/We certify that this is the only application submitted and no other application has been or is being separately submitted for this city or geographic area.

Date:

Place:

Name and Signature of entity or authorized signatory

Official seal

Instructions for filling the Application form:

(1)     All entries in the form and annexed documents should be legible with no cuttings.

(2)     Details requiring separate statement may be provided giving clear reference of the point against which the same is being attached.

(3)     All pages of the application form and all annexure, statements, etc need to be initialed by the person or official authorized by the applying entity through a notarized Power of Attorney.

(4)     Any information and data filled in the application form needs to be substantiated by attaching relevant proof of the same.

(5)     The entity is required to submit five copies of the application with all the enclosures in addition to the original.

(6)     Incomplete application is liable to be summarily rejected.

[117][***]

[118][Schedule-K

[See Regulation 5(6)(e)(i)]

Methodology for Computation of Net worth

Methodology for net worth computation under Method 1:

Net worth shall be computed as defined in Section 2 sub-section 57 of the Companies Act, 2013.

Methodology for Net Worth Computation under Method 2:

By valuation of assets on the following basis:

(A)     Investments in Listed (Quoted) companies in the name of the applicant (at market value) (Detailed list to be enclosed)

(B)     Margin of 30% on market value of listed (quoted) Investments

(C)     Net value of listed Investments (A) — (B)

(D)     Investments in unlisted (unquoted) companies (as per Note No. 2)

(E)     Margin of 50% on (D)

(F)      Net value of unlisted investments (D) — (E)

(G)     Other investments like PPF, NSC, bank deposits, company deposits etc. at current value

(H)     Total Net Investments (C) + (F) + (G)

(I)      Market value of land and building component of the fixed assets (full details of such assets like survey number, location, address, extent of land & building to be furnished)

(J)      Margin on I at 50%

(K)     Net value of such fixed assets (I — J).

(L)      Debtors not exceeding 3 months + cash & bank balances

(M)     Current Liabilities

(N)     Long term liabilities

(O)     Net worth (H + K + L) — (M + N)

Notes:—

(1)     Valuation of fixed assets for the purpose of net worth should be certified by government approved valuers which shall not be more than 2 months old on the date of submission of the bid. Only those items of land and building that are in the name of the entity as well as in the possession of the entity or proprietor shall be included under the head (I) land & building component of the fixed assets. Those properties that are leased out by the entity or taken on lease shall not be included for computation of net worth. Fixed assets other than Land and Building shall not be included for the purpose of computation of net worth.

(2)     Valuation of unlisted investments would be at “fair value” of the said investment, i.e. the average of the “break-up value” and the “earning value “and for this purpose:—

(a)      the “break-up value” means the equity capital and reserves as reduced by intangible assets and revaluation reserves, divided by the number of equity shares of the investee company.

(b)      the “earning value” means the value of an equity share computed by taking the average of profits after tax as reduced by the preference dividend and adjusted for extra-ordinary and nonrecurring items, for the immediately preceding three years and further divided by the number of equity shares of the investee company and capitalised at the following rate, namely:—

(i)       In case of predominantly manufacturing company, eight percent;

(ii)      In case of predominantly trading company, ten percent;

(iii)     In case of any other company, including an NBFC, twelve percent; and

(iv)    If, an investee company is a loss making company, the earning value will be taken at zero.

(e.g. earning value for an NBFC with capitalisation rate of 12%, is earning per share multiplied by 100/12)

(3)     Details of items comprising investments, current assets, current liabilities and long term liabilities shall be given separately.

(4)     Current assets should exclude loans to related entities, bad and doubtful debts and debts outstanding for more than 3 months, advance against capital assets, pledged securities or assets, prepaid expenses and also intangible assets.

(5)     Valuation of properties will be net of encumbrances with details of loan and other encumbrances, if any. In case there is no encumbrance, it shall be supported with a certificate by the entity that these are free from all encumbrances.

(6)     Company includes limited, private limited and limited liability partnerships (LLP).

(7)     In case the bidder is supported by an equity fund, net-worth shall be lower of assets under management of the equity fund and the amount of support by a legally binding document for supporting the entity to achieve the work program.]

[119][Appendix III

[See second Proviso of Regulation 10 (3)]

(On non-judicial stamp paper of appropriate value)

CORPORATE GUARANTEE FORMAT

THIS GUARANTEE(“Guarantee”) is issued on the ______ day of _____, ___ by, ______________, a Company organised and existing under the laws of ________________ having its Registered Office at (hereinafter referred to as “Guarantor”), at the request and behest of ___________, a Wholly Owned Subsidiary Company of the Guarantor organised and existing under the laws of ____________ having its Registered Office at ___________________ (hereinafter referred to as “Wholly Owned Subsidiary”), in favour of Petroleum and Natural Gas Regulatory Board, constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006 (having its Registered Office at 1st Floor, World Trade Center, Babar Road, New Delhi-110001 (hereinafter referred to as “Beneficiary” or “PNGRB”).

WHEREAS:

The Beneficiary has granted authorisation to the Guarantor to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Network(s) for ………….. (hereinafter referred as “Geographical Area”) vide letter dated ___________ (hereinafter referred as “Authorisation”). The Guarantor is willing to transfer the Authorisation of the geographical area authorised by the Beneficiary, along with the rights and obligations, in favour of its Wholly Owned Subsidiary. The Guarantor vide its letter dated _______________ informed the Beneficiary that Wholly Owned Subsidiary, will comply with the Authorisation terms and conditions. For this reason, the Guarantor is ready and willing to give a Corporate Guarantee (CG) inter alia for the performance of the Wholly Owned Subsidiary to the terms and conditions of the Authorisation and on failure to assume the said obligations.

We, the Guarantor hereby record the terms and conditions governing our obligations under this Guarantee with the intent of being legally bound by the same and hereby agree, covenant and bind ourselves as follows:—

(1)     The Guarantor hereby irrevocably and unconditionally guarantees to Beneficiary that its Wholly Owned Subsidiary will perform its obligations under the terms and conditions of the Authorisation and agrees to provide further guarantees, if so desired by Beneficiary, in terms of the Authorisation.

(2)     The Guarantor unconditionally and irrevocably guarantees to the Beneficiary that it will make available or cause to be made available all financial, technical and other resources required to ensure that the Wholly Owned Subsidiary can carry out its obligations of Work Programme as per the terms and conditions of the Authorisation and that the Wholly Owned Subsidiary at all times fully and effectively discharge its obligations under the terms and conditions of Authorisation, including by discharging the obligations within the time and cost so stipulated.

(3)     The Guarantor hereby agrees that if the Wholly Owned Subsidiary shall in any respect commit any breach or fails to fulfill any of the terms of the or complete it in all respects or if there is a failure to meet any obligations, then, the Guarantor will forthwith perform the same and fulfill all the obligations required under terms and conditions of Authorisation on behalf of the Wholly Owned Subsidiary, without any extra cost and time implications or will pay the penalty as per the extant Regulations.

(4)     The Guarantor further undertakes to indemnify all losses, damages, expenses, claims, costs and proceedings due to the failure or breach on the part of its Wholly Owned Subsidiary.

(5)     The Guarantor assures and undertakes that during the term of the Exclusivity Period or of any guarantee for performance as per the Authorisation, the Guarantor and the Guarantor's liability shall not be affected due to any incapacity or lack of power or legal personality or change in the status of the Wholly Owned Subsidiary or the Guarantor.

(6)     The Guarantor's liabilities under this Guarantee shall not exceed the liability of the Wholly Owned Subsidiary under the terms and conditions of Authorisation but this shall in any manner not affect the Guarantor's own responsibilities and liabilities under the Guarantee.

(7)     The obligation of the Guarantor shall take effect from the date of this Guarantee and shall remain in full force until all the obligations of the Wholly Owned Subsidiary have been fully performed and discharged. The Guarantor further undertakes to perform forthwith without insisting on any proof of breach of terms and conditions of Authorisation by its Wholly Owned Subsidiary and purely relying on Beneficiary' s written demand.

(8)     The liabilities of the Guarantor shall not be discharged, diminished or otherwise affected by—

(a)      any change in the Articles of Association or Bye-Laws or constitution of the Wholly Owned Subsidiary or the Guarantor;

(b)      any time, indulgence, waiver or consent given to Wholly Owned Subsidiary by the Beneficiary;

(c)      any amendment to the terms and conditions of Authorisation or any security or other guarantee or indemnity to which Wholly Owned Subsidiary has agreed; and

(d)      The dissolution, amalgamation, reconstruction or reorganisation of Wholly Owned Subsidiary or Guarantor.

(9)     NOTICE:

Any notice, demand, declaration or other communication to be given by the Beneficiary or the Guarantor to the other shall be in writing, in English language and delivered in person or by Air Mail or by Courier Services or by Facsimile or by E-Mail to the address given below, namely:—

(10)   GOVERNING LAW AND JURISDICTION:

This Guarantee shall be exclusively governed by and construed in accordance with the laws of India without giving effect to the principles of conflict of laws therein. No party shall take a plea that any forum is inconvenient. It may be enforced in terms of the Indian laws.

(11)   This Guarantee may be executed in one or more counterparts, all of which shall be read and construed as one document and any fax copy or scanned copy or print of a scanned copy of a signed Guarantee shall be deemed to be an original signature.

(12)   No modification, alteration or amendment of this Guarantee or any of its terms or provisions shall be valid or legally binding unless the Beneficiary consents to the same in writing.

(13)   No failure to take any action with respect to a breach of this Guarantee or a default by any other party shall constitute a waiver of the Beneficiary's right to enforce any provision of this Guarantee or to take action with respect to such breach or default or any subsequent breach or default.

(14)   Waiver of any breach or failure to comply with any provisions of this Guarantee shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of or failure to comply with any other provision of this Guarantee, unless any such waiver has been consented to by the Beneficiary in writing.

(15)   This document has been executed by a duly authorised signatory on behalf of the Guarantor having the requisite power to do so.

(16)   IN WITNESS WHEREOF the Guarantor has duly executed this Guarantee as at the date first above written.

[120][Appendix-IV

[See Schedule K]

(On non-judicial stamp paper of appropriate value)

PROMOTER OR HOLDING COMPANY GUARANTEE FORMAT

THIS GUARANTEE (“Guarantee”) is issued on the ________ day of ______, ___ by ________________, a Company organised and existing under the laws of ______________ having its Registered Office at ____________ *(and by ______________ a Company organised and existing under the laws of _____________ having its Registered Office at ______________ singly and/or jointly)* hereinafter referred to as “Guarantor”, at the request and/or behest of ________________, a Company organised and existing under the laws of ______________ having its Registered Office at _____________ (hereinafter referred to as “Bidding Entity”), in favour of Petroleum and Natural Gas Regulatory Board, constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006 (09 of 2006) having its Registered Office at 1st Floor, World Trade Center, Babar Road, New Delhi-110001 (hereinafter referred to as “Beneficiary” or “PNGRB”).

WHEREAS

The Beneficiary has floated an Application cum-Bid document dated ___________ inviting offers from Bidders for ______________ (purpose). The Bidding Entity has submitted their Application cum Bid document dated ______________ and advised the Beneficiary that the Bidding entity is the Joint Venture/Subsidiary Company of the Guarantor. The Guarantor vide its letter dated ______________ informed the Beneficiary that Bidding Entity, will participate in the Application cum-Bid document and desired that the Application cum-Bid document be considered by the Beneficiary based on the technical and financial strength of the Guarantor. For this reason, the Guarantor is ready and willing to give a Promoter Guarantee or Parent Company Guarantee (PCG) inter alia for the performance of the Bidding Entity to the terms and conditions of the Application cum-Bid document and on failure of Bidding Entity to assume the said obligations.

Having examined the ‘Application-cum-Bid document’ with reference to Bid No………. we …………., being the Promoter or Holding Company of …………… (Bidding Entity), certify that we possess the financial net worth as required by the Petroleum and Natural Gas Regulatory Board (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008.

Our net worth (calculated in accordance with provisions of the above regulations) and as certified by Chartered Accountant for the last financial year i.e……………. is Rs ………. Million. Certificate and documents in support of calculations are enclosed as Annexure……….

We, the Guarantor hereby record the terms and conditions governing our obligations under this Guarantee with the intent of being legally bound by the same and hereby agree, covenant and bind ourselves as follows, namely:—

(1)     We ………. as promoter/holding company of ………. (Bidding Entity) undertake that our financial contribution to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks in the authorised geographical area of ……….shall be infused in a phased manner as per the project financing schedule approved at the time of achieving financial closure.

(2)     The Guarantor hereby irrevocably and unconditionally guarantees to Beneficiary that Bidding Entity will perform its obligations as per the terms and conditions of the Application cum-Bid document, if the Bid is awarded to them in future for ___________ and agrees to provide further Guarantee, if so desired by Beneficiary, in terms of the Application cum-Bid document.

(3)     The Guarantor further unconditionally and irrevocably guarantees to the Beneficiary the due and punctual compliance by the Bidding Entity of any obligations under the Application cum-Bid document.

(4)     The Guarantor unconditionally and irrevocably guarantees to the Beneficiary that it will make available or cause to be made available to the Bidding Entity all financial, technical and other resources required to ensure that the Bidding Entity can carry out its obligations as per the Application cum-Bid documents terms and conditions and that the Bidding Entity at all times fully and effectively discharge its obligations under the terms and conditions of Application cum-Bid document.

(5)     The Guarantor hereby agrees that if the Bidding Entity shall in any respect commit any breach or fails to fulfill any of the terms of the Application cum-Bid document or complete it in all respects or if there is a failure to meet any obligations then the Guarantor will forthwith perform the same and fulfill all the obligations required under Application cum-Bid document terms and conditions on behalf of the Bidding Entity.

(6)     The Guarantor further undertakes to indemnify all losses, damages, expenses, claims, costs and proceedings which may be suffered or incurred by Beneficiary due to the failure or breach on the part of Bidding Entity.

(7)     The Guarantor assures and undertakes that during the term of the completion of the Work Program or performance as per the Application cum-Bid document, the Bidding Entity shall continue to be the Joint Venture/Subsidiary Company of the Guarantor and the Guarantor's liability shall not be affected due to any incapacity or lack of power or legal personality or change in the status of the Bidding Entity or the Guarantor.

(8)     The Guarantor's liabilities under this Guarantee shall not exceed the liability of the Bidding Entity under the Application cum-Bid document terms and conditions but this shall in any manner not affect the Guarantor's own responsibilities and liabilities under the Guarantee.

(9)     The obligation of the Guarantor shall take effect from the date of this Guarantee and shall remain in full force until all the obligations of the Bidding Entity have been fully performed and discharged. The Guarantor further undertakes to perform forthwith without insisting on any proof of breach of Application cum-Bid document by its Bidding Entity and purely relying on Beneficiary's written demand.

(10)   The liabilities of the Guarantor shall not be discharged, diminished or otherwise affected by:—

(a)      any change in the Articles of Association or Bye-Laws or constitution of the Bidding Entity or the Guarantor;

(b)      any time, indulgence, waiver or consent given to Bidding Entity by the Beneficiary;

(c)      any amendment to the Authorisation or any security or other guarantee or indemnity to which Bidding Entity has agreed; and

(d)      The dissolution, amalgamation, reconstruction or reorganization of Bidding Entity or Guarantor.

(11)   NOTICES:

Any notice, demand, declaration or other communication to be given by the Beneficiary or the Guarantor to the other shall be in writing, in English language and delivered in person or by Air Mail or by Courier Services or by Facsimile or by E-Mail to the address given below, namely:—

(12)   GOVERNING LAW AND JURISDICTION:

This Guarantee shall be exclusively governed by and construed in accordance with the laws of India without giving effect to the principles of conflict of laws therein. No party shall take a plea that any forum is inconvenient. It may be enforced in terms of the Indian laws.

(13)   This Guarantee may be executed in one or more counterparts, all of which shall be read and construed as one document and any fax copy or scanned copy or print of a scanned copy of a signed Guarantee shall be deemed to be an original signature.

(14)   No modification, alteration or amendment of this Guarantee or any of its terms or provisions shall be valid or legally binding unless the Beneficiary consents to the same in writing.

(15)   No failure to take any action with respect to a breach of this Guarantee or a default by any other party shall constitute a waiver of the Beneficiary's right to enforce any provision of this Guarantee or to take action with respect to such breach or default or any subsequent breach or default.

(16)   Waiver of any breach or failure to comply with any provisions of this Guarantee shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of or failure to comply with any other provision of this Guarantee, unless any such waiver has been consented to by the concerned party in writing.

(17)   This document has been executed by a duly authorized signatory on behalf of the Guarantor having the requisite power to do so.

IN WITNESS WHEREOF the Guarantor has duly executed this Guarantee as at the date first above written.