India launches biggest auction of City Gas Distribution networks

May 9, 2018 12:42 IST
India launches biggest auction of City Gas Distribution networks

India on May 8, 2018 launched its biggest auction of City Gas Distribution (CGD) networks, offering permits to companies for selling Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in 86 geographical areas.

As per the Petroleum and Natural Gas Regulatory Board (PNGRB), that acts as a facilitator for the CGD network, this 9th CGD licensing auction is expected to attract investment of Rs 70000 crore. The last day for bidding is July 10, 2018.

Cities for which CGD licences are on offer

Bhopal                

Coimbatore

Ahmednagar       

Salem

Ludhiana              

Allahabad

Jalandhar              

Amethi

Barmer              

Rai Bareli

Alwar,                 

Burdwan

Dehradun

 

Changes in the bidding process

• This time, changes have been made to the bidding conditions to attract greater investment from the exercise, such as the granting of utilities status to CGD networks by the Union Labour Ministry.

• Under the changed parameters, maximum weightage of 50 percent has been given to the number of piped gas connections proposed in previous eight years, as against 30 percent earlier.

• 20 percent weightage has been given to the number of CNG dispensing stations.

• 10 percent weightage gas been granted to the length of the pipeline to be laid in a geographical area and the tariffs proposed for city gas and CNG, each.

• There is a floor tariff of Rs 30 for city gas and Rs 2 per kg for CNG to prevent bidders from quoting low tariffs.

• Companies with net worth of not less than Rs 150 crore can bid for cities with a population of 50 lakh and more, those with Rs 100 crore net worth can bid for cities with 20 lakh to 50 lakh population and firms with Rs 5 crore net worth can bid for cities that have less than 10 lakh population.

• The authorised entity is required to achieve financial closure within 270 days from the date of grant of licence.

• The winning company will have 8 years of marketing exclusivity in the city, as against the current 5-year licence.

Background

The CGD auctions will help bring gas coverage to 174 districts in 22 states and Union Territories, covering around 29 percent of the country's area and 24 percent of the population.

So far, 91 geographical areas have been awarded to companies like Indraprastha Gas, GAIL Gas and Gujarat Gas, which cover 11 percent of area and 19 percent of the population. These existing CGD networks are concentrated in the northern and western regions of the country.

 

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