Section 10 in The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Petroleum and Petroleum Products Pipelines) Regulations, 2010
10. Capacity booking petroleum petroleum tie-up and financial closure.
(1)The authorized entity may achieve agreement-for transport of petroleum products with any entity equal to at least fifty per cent. of the petroleum and petroleum products pipeline capacity considered in clause (c) to sub-regulation (1) of regulation 7 for each of the first five years following the commissioning of the petroleum and petroleum products pipeline other than common carrier capacity.(2)The agreement specified under sub-regulation (1) shall be entered into a transparent manner and be based on the principle of at an arm's length:Provided that up to ten percent of the throughput capacity in the petroleum and petroleum products pipeline specified under sub-regulation (1) may be booked on firm and mutually agreed terms without insisting on physical delivery of petroleum and petroleum products.(3)The entity shall submit copy of the agreement [Heads of Agreement (HOA)/ Memorandum of Understanding (MOU)] specified under sub-regulation (1) to the Board within a period of one hundred and eighty days of the date of the issue of the authorization.(4)The authorized entity shall obtain the financial closure of the project from a scheduled bank or financial institution within a period of one hundred and eighty days from the dote of the authorization.(5)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 one hundred and twenty days of the authorization:Provided that the Board may ask the entity to submit any further details or clarifications on the financial closure.(6)In case the entity fails to meet the requirements at sub-regulations (1) to (5), the authorization of the entity for laying building, operating or expanding petroleum petroleum products pipeline 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.
