City gas firms oppose proposed cut in bidding time for pipeline projects

Say move will discourage competitive bidding, hit development of downstream gas sector

The Petroleum and Natural Gas Regulatory Board (PNGRB)’s proposal to lower the time limit for companies to submit bids for projects involving setting up of gas distribution networks does not seem to have gone down well with city gas distribution (CGD) companies.

Indraprastha Gas Ltd (IGL) and Gujarat Gas Company Ltd (GGCL), two of the largest CGD firms, have opposed the proposal, arguing such a move will discourage competitive bidding for projects, lead to chaos, and affect development of the downstream gas sector.

PNGRB, the downstream petroleum regulator, had last month invited views on draft amendments to the PNGRB (Authorising Entities to Lay, Build, Operate or Expand City or Local Gas Distribution networks) Regulations, 2008.

The current rules allow companies 120 days to submit bids (from the day those are invited). With a focus on the development of CGD networks and to ensure grant of authorisation to companies for speedy laying down of gas distribution infrastructure, PNGRB had proposed to halve the time limit to 60 days.

In its comments, GGCL has suggested retaining the 120-day timeframe. It has said evaluation of the geographical area offered for bidding takes considerable time — for commercial, technical, connectivity-related, safety and other checks. Besides, preparation of detailed surveys and economic evaluation take time. The amount of investment and the uncertainty involved need to go through approvals from a company’s management and board of directors.

“It will be imperative to note most gas pipeline projects have been delayed due to right of use (RoU) permission, labour issues, etc. Awarding CGDs without connectivity will lead to chaos and hamper the development of the downstream gas sector. The reduced period for submission of bids will give serious and desirous bidders less time for comprehensive evaluation of the geographical area, thereby discouraging competitive bidding,” GGCL said.

IGL, which supplies compressed natural gas and piped natural gas to consumers in and around Delhi, has also commented in favour of retaining the 120-day limit. “The bidding process involves volumes of work, including detailed survey for evaluation of the potential market, making demand estimates, hiring consultants, and preparing detailed bid documents,” IGL has said.

The company requested the regulator not to reduce the time period, saying 60 days would not be sufficient for meaningful participation in the bidding process.