State-owned fuel retailers IOC and BPCL, as well as billionaire Gautam Adani's group, were the top bidders for gas retailing licences in the country's biggest city gas distribution (CGD) bid round.
State-owned fuel retailers IOC and BPCL, as well as billionaire Gautam Adani’s group, were the top bidders for gas retailing licences in the country’s biggest city gas distribution (CGD) bid round. Of the 86 cities offered for retailing of CNG to automobiles and piped cooking gas to households in the 9th CGD bid round, IOC bid for 34 cities on its own and another 20 in partnership with Adani Gas Ltd, according to final bid information provided by the Petroleum and Natural Gas Regulatory Board (PNGRB). Adani Gas on its own bid for 32 cities.
Bharat Gas Resources Ltd, a unit of Bharat Petroleum Corp Ltd (BPCL), bid for as many as 53 cities while state-owned gas utility GAIL India Ltd’s retailing arm, GAIL Gas Ltd, put in offers for 34 cities. Gujarat-based Torrent Gas Pvt Ltd bid for 31 cities while Gujarat Gas Ltd put in offers for 21 areas. Petronet LNG Ltd, India’s largest liquefied natural gas (LNG) importer, sought to foray into CGD business by bidding for the licence in seven cities. Indraprastha Gas Ltd, which retails CNG in the national capital region, put in bids for 11 cities.
According to PNGRB, a total of 400 bids were received for the 86 permits on offer. As many as eight cities received single bids. Only Indian Oil Corp bid for Aurangabad in Bihar and Rewa in Madhya Pradesh. Similarly, only Adani Gas offered for Balasore in Odisha; GAIL Gas for Gangan in Odisha; Bharat Gas Resources Ltd’s for Bidar in Karnataka and Amethi in Uttar Pradesh; IOC-Adani combine’s for Allahabad in Uttar Pradesh, and Gujarat Gas’ bid for Narmada in Gujarat. The highest number of 15 bids were received for Srikakulam-Visakhapatnam-Vizianagarm districts.
Bidding for the biggest CGD licensing round closed on July 10. 174 districts in 22 states and union territories were clubbed into 86 permits in the bid round. Essel Infraprojects Ltd has put in a total of seven bids. Other bidders included Mahanagar Gas Ltd, H-Energy, Unison ENviro Pvt Ltd, IMC Ltd Assam Gas, Think Gas Investments Pte Ltd, AG&P LNG Marketing Pte Ltd, IRM Energy Pvt Ltd and Enertech Fuel Solutions Pvt Ltd. PNGRB had on July 10 stated that while it had earlier said that bids would be finalised by October, it would try to expedite the process.
“Once awarded, it is envisaged that this initiative would help in creating a robust infrastructure by bringing investment of about Rs 70,000 crore, generate employment and play a significant role in achieving the shift towards a gas-based economy, with natural gas as the next-generation, cheaper and environment friendly fossil fuel,” it had said. The GAs cover 24 per cent of the country’s area and 29 per cent of its population. The government is targeting to raise the share of natural gas in primary energy basket to 15 per cent, from 6.2 per cent at present, within a few years. The bid round is also aimed at meeting Prime Minister Narendra Modi’s target of giving piped cooking gas connection to 1 crore households, roughly triple the current size, by 2020.
Prior to the 9th round, 91 GAs were awarded to firms like Indraprastha Gas Ltd and GAIL Gas Ltd, which are serving 240 million population, 42 lakh domestic consumers and 31 lakh CNG vehicles. Of these, 56 GAs were awarded through bidding rounds and the rest on government nomination. The 9th bid round was being held on changed parameters after one paisa bids spoilt the initial auction rounds. Bidders have been asked to quote the number of CNG stations to be set up and the number of domestic cooking gas connections to be given in the first eight years of operation.
In the previous eight rounds, bidders were asked to quote only the tariff for the pipeline that carries gas within the city limits. The bidding criteria did not include the rate at which an entity would sell CNG to automobiles or piped natural gas to households using the same pipeline network, leading to companies offering one paisa as the tariff to win licenses. In the new guidelines, maximum weightage of 50 per cent has been given to the number of piped gas connections proposed in eight years from the date of authorisation, as compared to 30 per cent earlier.
The number of CNG dispensing stations proposed to be set up has been assigned 20 per cent weightage. Length of the pipeline to be laid in the GA and the tariff proposed for city gas and Compressed Natural Gas (CNG) has been assigned 10 per cent weightage each. Also, a floor tariff of Rs 30 for city gas and Rs 2 per kg for CNG has been put in order to deter bidders from quoting unviable tariff of 1 paisa per unit.