NEW DELHI: With the pandemic and subsequent restrictions having delayed, or fully halted, most major infrastructure projects, Thursday saw the oil and gas sector regulator—Petroleum and Natural Gas Regulatory Board (PNGRB) — releasing a set of force majeure norms for City Gas Distribution (CGD) firms.
Force majeure is a liability-related clause added to contracts which stipulates that in the event of natural or unavoidable catastrophes, the parties to the contract will not be held in breach if they are unable to fulfill the terms of the agreement.
In the case of CGD entities, a force majeure is required since the PNGRB issues city gas licences permitting these entities to retail CNG to automobiles and piped cooking gas to households on the basis of them committing to work on infrastructure projects such as the laying of gas pipelines and setting up dispensing stations.
Many of these projects have now been heavily disrupted due to the pandemic, lockdowns and the summer’s mass reverse migration of labour. While many CGD firms had claimed force majeure, they had not been recognised due to the absence of such norms.
On Thursday, PNGRB fixed this issue. “In the event of authorized 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,” the regulator said.
These conditions include war/hostilities, major riots or civil commotion, natural calamities such as earthquake and floods, and “restrictions imposed by central or state government” that prevent or delay project execution. The duration of the force majeure would be decided by the regulator. However, licensees are required to intimate the Board within 15 days from the date of occurrence of the force majeure event.