In the latest round, PNGRB has invited bids for development of CGD network in nine states including – Madhya Pradesh (5), Gujarat (8), Maharashtra (2), Uttar Pradesh (8), Karnataka (2), Haryana (4), Goa (1), Punjab (3) and Uttrakahand (1). (Photo:Reuters)
The Petroleum and Natural Gas Regulatory Board (PNGRB) has put out 34 areas for bidding to set up city gas distribution (CGD) networks under the six round of auction. The preliminary bids would close on December 14, said the auction notice issued on October 1.
This is at a time when responses to the recently held fifth round were not encouraging. In the previous auction round, where 20 areas across six states – Andhra Pradesh, Maharashtra, Uttar Pradesh. Gujarat, Karnataka and Uttarakhand – were put out on bid, the regulatory board could award just eight. This is because several areas did not receive any bids and some received just single bid. Lack of demand for natural gas has dampened the target to provide clean fuel to more than 200 cities in India.
In the latest round, PNGRB has invited bids for development of CGD network in nine states including – Madhya Pradesh (5), Gujarat (8), Maharashtra (2), Uttar Pradesh (8), Karnataka (2), Haryana (4), Goa (1), Punjab (3) and Uttrakahand (1).
An official at the downstream regulator said that in the fifth round the areas where bidders showed interest have been awarded. “The remaining would be put out again for bidding once market condition improves,” the official told FE.
In sync with Prime Minister Narendra Modi government’s plan to roll out cleaner fuel to newer cities, as many as 46 new districts in the country could see city gas distribution networks being rolled out in 2015-16.
To facilitate expansion of the cleaner fuel, the government has allocated 100% domestic gas supply for city gas usage. Petroleum minister Dharmendra Pradhan earlier said that PNGRB has envisaged a phased roll-out for development of city gas networks in several geographical areas, depending on natural gas pipeline connectivity and gas availability.
The primary reason behind companies not willing to invest in CGD is fear of ‘commercial viability.’ The alternate fuels such as diesel, fuel oil or even naptha are easily available and cheap at the current scenario. This is why small and medium scale industries are not willing to invest to change over to gas.
In order to lay a commercially viable CGD network, there should substantial numbers of commercial and industrial customer. Indraprastha Gas Limited (IGL), which delivers natural gas in Delhi and its surrounding areas has about 700 industrial customers, 1,500 commercial customers such as malls, hospitals and hotels and another 5.25 lakh household consumers.
In the past, India has not been successful in expanding city gas. This is primarily because of scarcity of indigenous gas and hurdles to lay pipelines in crowded localities. Currently, nearly 50 cities and towns in India are covered under city gas distribution network. In order to facilitate expansion of cleaner fuel, the government has allocated 100% domestic gas supply for city gas usage.