Ninth CGD auction: Government expects Rs 70k-crore investment

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New Delhi | Published: May 9, 2018 4:47:37 AM

The ninth licensing round of city gas distribution (CGD) is likely to attract investments of around Rs70,000 crore with 86 geographical areas (GAs) put on offer, according to the government.

cgd, roadshow, population indiaThe 86 GAs in the new round will cover 24% of India’s area and 29% of the population.

The ninth licensing round of city gas distribution (CGD) is likely to attract investments of around Rs70,000 crore with 86 geographical areas (GAs) put on offer, according to the government.

The 86 GAs in the new round will cover 24% of India’s area and 29% of the population. In other words, they cover 174 districts across 22 states and Union Territories. Currently, 91 GAs with 24% of the population have piped natural gas facility.

Speaking at a road show in New Delhi on Tuesday, petroleum minister Dharmendra Pradhan said that commercial and industrial customers will ensure early monetisation of investments in the sector, though margins in domestic connections are low. “There is huge potential for gas, especially in industries,” Pradhan added.

The existing CGD operators include Indraprastha Gas and GAIL Gas which serve 24 crore population through 42 lakh domestic connections and 31 lakh compressed natural gas (CNG) vehicles. The government aims to connect 1 crore households with piped gas by 2020.

Under the revised rules in the current round, bidders will have to quote the number of CNG stations to be set up and domestic cooking gas connections to be given during the first eight years of operation. Earlier, bidders had to quote only the tariff for the pipeline within cities and did not include the price of selling CNG or PNG using the same pipeline network and lead to operators offering one paisa as the tariff to win licences.

Pradhan added that the GAs selected now have been done keeping in mind the industrial clusters across the country to maximise returns for investors. If all these 86 GAs are taken up by bidders, the problem of skewed presence of CGD in different parts of the country will be addressed. At present, of all the areas have CGD, west India accounts for 60% followed by north with 35%. The east and south parts of the country have 4% and 1% share, respectively.

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