In a move aimed at enhancing safety, raising operational efficiency and regulating the gas distribution market, the Minister of Energy issued a decision approving the Residential and Commercial Gas Network Activity Regulation, which will be effective from the date of its publication on the Ministry's website, forming a new regulatory framework governing the establishment and operation of gas distribution networks in the Kingdom.
Gas Network Activity Regulation
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What is gas network activity?
The regulation defines gas network activity as the establishment, development, operation or maintenance of dry gas distribution networks or independent distribution networks, in addition to connecting residential and commercial facilities to them, and supplying consumers with dry gas, liquid petroleum gas or alternative natural gas.
The regulation defines gas network activity as including the establishment, development, operation or maintenance of dry gas distribution networks or independent distribution networks, in addition to connecting residential and commercial facilities to them.
A standalone gas distribution network is a self-contained distribution system that receives gas - whether liquefied petroleum gas, alternative natural gas, or dry gas - from reservoirs or associated facilities and pumps it through pipelines to consumers" meters. These networks include distribution lines, control valves, tanks, monitoring and control systems, meters, and dispensers.
Technical and operational obligations on licensees
License fees and payment mechanism License fees and payment mechanism.
Supply and pricing controls The regulation also regulates the procedures for issuing invoices, accounting separation mechanisms, and methods of evaluating the activity of establishing dry gas distribution networks.
With this new regulation, the gas distribution system is moving towards a more disciplined and clear stage, based on safety and efficiency standards, and opens the way for organized investments that serve the residential and commercial sectors.
For full details of the regulation click here
The second article of the regulation stipulates a set of obligations that licensees must adhere to, most notably installing meters for consumers, preparing integrated safety, reliability and maintenance plans, and developing a technical management plan that ensures sustainable operation in accordance with the highest standards.
The third article also deals with defining the characteristics and technical specifications of gases subject to the provisions of the system, which enhances service quality and maintains safety standards.
The regulation specifies the financial compensation for issuing or renewing licenses; the license fee for establishing a dry gas distribution network is 20 thousand riyals for 15 years, while the license fee for establishing an independent gas distribution network is 5 thousand riyals for 5 years, and the fees are paid once before issuing or renewing the license.
The regulation obliges the licensee to obtain dry gas from Saudi Aramco's gas source, according to its approved technical standards and requirements and at the officially determined price, with the obligation to distribute gas to consumers within the scope of the license according to the approved tariff.The regulation also regulates billing procedures, accounting separation mechanisms, and methods of evaluating the activity of establishing dry gas distribution networks, which enhances transparency and establishes financial governance in this vital sector.
