Supreme Decree that amends the Regulation of Natural Gas Distribution by Pipeline Network
was adopted by Supreme Decree N° 042-99-EM
By Supreme Decree N° 008-2021-EM ("Supreme Decree"), published on April 18, 2021 in the Official Gazette El Peruano, several amendments were adopted to the Regulation of Natural Gas Distribution by Pipeline Network, adopted by Supreme Decree N° 042-99-EM ("Distribution Regulations"). This, in order to align the provisions of the Distribution Regulations to the Peruvian National Energy Policy 2010-2040, adopted by Supreme Decree N° 064-2010-EM, and to Law N° 29852 – Law that creates the Energy Security System in Hydrocarbons and the Energy Social Inclusion Fund ("Law N° 29852"), and its regulations, adopted by Supreme Decree N° 021-2012-EM; as well as simplifying the procedures for accessing the natural gas distribution service by pipeline network ("Distribution Service"), among others.
The most relevant amendments are listed below:
– The definition of "Connection" was amended and new definitions were incorporated as "Complaint", referring to the report that the citizens make on the occurrence of facts related to natural gas activities that could constitute non-compliance, and "FISE" and "SISE".
– A term of ten days, counted from the declaration of origin of the party's request for the granting of an Concession, was established to issue the Ministerial Resolution that formalizes the granting of the Concession, adopts the respective contract and designates the official who shall intervene on behalf of the State, providing predictability to the procedure.
– It was provided that the adoption of acts related to the granting of the Concession, amendment of the concession contract, declaration of expiration of the concession, among others, shall be formalized by the issuance of a Ministerial Resolution, instead of a Supreme Resolution, in order to expedite the procedure to be followed.
– The deadlines applicable to the Concessionaire for the processing of requests for access to the Distribution Service were reduced. In the event of non-compliance, OSINERGMIN may apply sanctions, except for non-compliance arising from any of the situations not attributable to the Concessionaire listed in paragraph b) of Article 42 of the Distribution Regulation; which must be duly certified.
– It was specified that infrastructure shall be considered to exist in the areas where new distribution networks are developed when the distribution network is gasified.
– The periodicity of the report to be submitted by the Concessionaire to the General Directorate for Hydrocarbons ("DGH") was amended from quarterly to monthly, and the report on "sales volume by tariff category" was replaced by "volume invoiced and actually consumed". In addition, the obligation of the Concessionaire to send an evaluation report to the DGH every six months on the performance of the final natural gas tariffs, their components and their competitiveness with respect to the substitute energy, as well as other aspects that the Concessionaire considers relevant, was incorporated.
– Clarifications were included in Article 63 c, referring to the minimum content that the Concessionaire must include in its Five Year Plan proposal, and the registry of requests for access to the Distribution Service submitted by interested parties that were considered by the Concessionaire in its Five Year Plan proposal.
– The power to adopt supply contract models for Regulated Consumers was transferred to OSINERGMIN.
– The details of the concepts to be included in the invoicing to be issued to Consumers and the concepts to be financed were amended to facilitate the conversion process for the use of natural gas, from which the Connection Pipeline and the infrastructure required by the residential consumers for the use of natural gas were removed, and the concepts of the upstream line and regulation system were included.
– The definition of "Internal Installations" was amended, specifying that these include the protection box or cell and start at the service connection, including it. Likewise, provisions related to the qualification procedure of Internal Installations and the registration of Installers before OSINERMIN were included.
– It was specified that, in addition to the efforts made by the Concessionaire, the Ministry of Energy and Mines, through the DGH, may enter into agreements with the municipalities in order to facilitate the procedure for the opening of pavements, roads and sidewalks of the public roads located within the Concession Area, in order to shorten the terms for the execution of works related to the Distribution Service.
– Public institutions were incorporated as special consumers and it was specified that the DGH may
request the Concessionaire to include other special categories.
– On the other hand, it was specified that the Consumers -regulated and independent- who contract the Transport and/or Supply Services of natural gas with the Concessionaire shall pay the Transportation Cost and/or Supply Cost of natural gas with efficiency criteria, being efficiency understood as guaranteeing the safety and availability of the service up to the projected annual demand of the Consumers that contract such services. Likewise, it is specified that such Transport capacity shall be adopted by OSINERGMIN and/or the promoter in the regulatory processes and/or promotion processes, as appropriate. On the other hand, the Concessionaire shall determine the volumes of Supply and/or Transport capacity to be contracted, always seeking to preserve the competitiveness of the final natural gas tariffs, establishing that in the event that the mentioned natural gas volumes are higher than the annual demand, the associated costs may not be transferred to the Consumers.
– It was specified that the amendments incorporated in Article 107 of the Distribution Regulations shall not be applicable to Concessionaires that at the date of entry into force of the Supreme Decree are in the initial tariff period, prevailing the provisions of their Concession Agreement.
– It was provided that the complaints filed by residential consumers must be attended within a term not exceeding ten days and the Complaints (referring to non-compliance of the Concessionaire) within a term not exceeding thirty days.
– The Concessionaire was required to report monthly to the DGH the investments carried out in accordance with the commitments set out in the Annual Investment Plans.
– It was specified that the drafts for the massification of natural gas implemented within the framework of the provisions of Law N° 29852 and its regulations shall incorporate the criteria developed in the Sixth Final Complementary Provision of the Supreme Decree, among which we highlight the following: (i) New investments in capital assets shall not be subject to refund, shall not be considered for the calculation of the New Replacement Value in the tariff regulations made by OSINERGMIN and shall not be part of the book value of the assets of the Concession for the purpose of the termination of the concession; (ii) The costs of the operation and maintenance of
the new investments in capital assets shall be covered with the current distribution tariff and/or initial tariffs; and the income corresponding to these infrastructures shall be included in the following tariff regulations; and (iii) In all matters not provided for, the provisions of Law N° 29852, its regulations and complementary procedures shall be applicable.
– The Fifth Complementary Provision of the Distribution Regulations was repealed; which provided that the Concessionaires had to invoice the Natural Gas to the Compression Stations and Liquefaction Plants considering the prices and tariffs applicable to the type of final consumer that these agents would serve.
– It was provided that the Concessionaires:
o Adapt their IT platforms within a maximum period of 60 working days after the adaptation to the Enabling Portal and other IT tools and/or databases by OSINERGMIN; which shall take place within 90 working days after the entry into force of the Supreme Decree.
o Publish on its website the requirements and the collection contract model mentioned in Article 66 of the Distribution Regulations within 30 working days after the entry into force of
the Supreme Decree.
Any consultation on this matter may be answered by doctors Jorge Pérez-Taiman (jpereztaiman@estudiorodrigo.com), Carolina Noriega (cnoriega@estudiorodrigo.com), Piero Scarafone (pscarafone@estudiorodrigo.com) and/or Talía Hormaeche (thormaeche@estudiorodrigo.com).
