Gas distribution bids for seven cities to be cleared soon

Adani, GSPC, EIL and Gail Gas to benefit

Three years after the Petroleum and Natural Gas Regulatory Board (PNGRB) launched the third round of city gas distribution, it is set to clear this soon, PNGRB sources said. This comes as a breather to Indian Oil Corporation (IOC), Adani Energy, Gujarat State Petroleum Corp, Engineers India and GAIL Gas, among the 26 companies that had made 51 bids for the project in July 2010.

“The technical bids were received and, subject to their approval, the financial bids are to be opened. The board will certainly consider and clear the third round soon,” said a senior PNGRB official. The board would first open technical bids for Asansol, Durgapur and Ludhiana, followed by price bids for all seven cities in June or July.

Ludhiana had received the largest number of bids (16), followed by Jalandhar (12). While Kutch (east) received eight bids, Asansol-Durgapur received seven. Kutch (west) and Jamnagar district had received four and two bids, respectively.

Earlier, IOC, GAIL and Indraprastha Gas Limited had alleged some companies had deliberately suppressed key input costs to keep their overall capital costs competitive. To score more in the bidding process, bidders had indicated low figures towards network rates and compression charges.

For bids, four aspects are considered— network rate, inch kilometres of steel pipelines, the number of domestic connections in the first five years and compression charges from six to 25 years. According to the parameters, the highest score for network rate is 40, for compression charge 10, for the number of domestic connections 30 and for inch kilometres of steel pipelines 20.

It was said bidders had scaled up compression charges for a few years of the project life. For this, there may not be any takers, according to the current market conditions.

City gas distribution bidders said at one paisa/million British thermal unit, the rate projected by some of the bidders in the third round was too low to recover the cost of laying the network, in violation of the PNGRB Act, 2006. The fourth round of bidding was started in October 2010, for eight cities. In November 2012, this was cancelled by the regulator on allegations of irregularities.

“Anything after the third round would take into account new regulations and bidding parameters. A view has been taken, and we will be following an open house and a consultation process for new bidding parameters,” the PNGRB official said.

The PNGRB has envisaged a phased roll-out plan for city gas distribution network development, covering more than 300 cities and towns across various states.