The downstream regulator had last week issued a fresh set of guidelines to examine the requests of CGD players for time extension on account of Force Majeure (FM) events. The guidelines list events such as war, riots, natural disasters and restrictions by the central or state governments as conditions that qualify under FM and can result in time extension to complete Minimum Work Programme (MWP) obligations.
PNGRB may also further allow additional restoration period after the determination of the event of FM for restoration of the activities, ratings agency ICRA said in a statement today. “The difficulties for CGD players associated with re-mobilization and availability of equipment, labor and other resources to resume project execution could be covered under this restoration period and would be additional relief to entities executing new projects,” it said.
Over the last few months, while several city gas firms have claimed Force Majeure (FM) after work on sites got stalled due to the lockdowns, such claims could not be immediately accepted by the regulator PNGRB in the absence of guidelines listing the events that can trigger FM.
The new guidelines by PNGRB come as a major relief for CGD companies. They clarify in the event of the authorized entity being unable to perform any obligation required to be performed as per the MWP, due to FM, the relative obligation of the entity affected by such FM will be suspended for the period during which such FM lasts.
“All CGD licensees awarded after 2015 (Bid rounds 5 to 10) would currently be executing their committed MWPs and are likely to have sought extension with the PNGRB as a nationwide lockdown to contain the spread of COVID-19 from March 25, 2020 and state-level lockdowns since June hampered the progress of work on city gas projects,” said Ankit Patel, Vice president and Co Head, Corporate Ratings, ICRA.
CGD players have MWP obligations for each year in terms of the length of pipelines, number of CNG stations and number of domestic connections to be completed during each of their initial years after receiving exclusive authorization to market gas in each Geographical Area which generally consists of 1-3 districts. If there is delay in execution, CGD regulations permit imposition of penalties on the entities.