Section 16 in The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

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Union of India - Section

Section 16 in The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

16. [ Consequence of default pre-determined penalties and termination of authorisation procedure. [Substituted by Notification No. F.No.PNGRB/Auth./CGD/Amd/2018, dated 6.4.2018 (w.e.f. 19.3.2008).]

(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 [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 predetermined penalty of Rs.30,00,000 [i.e. (Rs.750 X (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 [CNG station] [Substituted 'natural gas station' by Notification No. F.No.PNGRB/Auth./CGD/Amd/2018/2, dated 27.4.2018 (w.e.f. 19.3.2008).], 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 cognisance 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 [CNG station] [Substituted 'natural gas station' by Notification No. F.No.PNGRB/Auth./CGD/Amd/2018/2, dated 27.4.2018 (w.e.f. 19.3.2008).], 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: -

Parameter	Weightage in % (A)	Target at the end of 3rd year (B)	Actual at the end of 3rd year (C)	Weighted achievement in % D= (C/B)*A/100
PNG connections	50	30000	10000	16.67
Inch-kilometer	10	500	100	2.00
CNG stations	20	4	2	10.00
Total	80
Total achievement with reference to target				28.67 (X)
Total Weight achievement in %	100			35.83 (X*100/80)

(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.]

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Union of India - Section

Section 16 in The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008

16. [ Consequence of default pre-determined penalties and termination of authorisation procedure. [Substituted by Notification No. F.No.PNGRB/Auth./CGD/Amd/2018, dated 6.4.2018 (w.e.f. 19.3.2008).]