IOC-Adani quotes zero tariff; win CNG rights for Ghaziabad

After Chandigarh and Allahabad, Indian Oil Corp (IOC) and Adani Energy combine has bagged rights to retail CNG to automobiles and piped gas to industries in Ghaziabad by quoting nil or zero pipeline tariff.     

Petroleum and Natural Gas Regulatory Board (PNGRB) today opened price bids for Ghaziabad — last of the seven cities for which it had called bids for giving out city gas distribution licence — and ranked IOC-Adani combine as the most preferred, sources in the Board said.     

Gujarat's GSPC Gas came second among the six bidders.     

PNGRB, however, cannot issue a licence because of a Delhi High Court order restraining it from doing so till the time the court decides on a petition challenging its authority to issue licences.     

Sources said PNGRB had asked the companies to quote only the tariff that they will charge for transporting gas within the perimeters of a city and left the final selling price of the fuel for the companies to decide.     

This provision of 'zero' tariff, sources said, is made up by companies through CNG charges levied from users — household or industries — as they deem fit.    

IOC-Adani combine quoted 'zero' pipeline tariff for all of the 25 years of the licence, making a mockery of the entire exercise. They had previously quoted zero pipeline tariff for 25 years in Chandigarh and the same for seven years in Allahabad.

Besides IOC-Adani and GSPC Gas, others who were in fray for Ghaziabad city gas licence included Hindustan Petroleum Corp Ltd, GAIL Gas, Indraprasthra Gas and Siti Energy.     

Reliance Gas had previously won rights for Rajahmundry and Yanam in Andhra Pradesh and Shahdol in Madhya Pradesh. Jhansi had gone to GAIL Gas.     

PNGRB regulations allow a five-year marketing exclusivity to the winning company, sources said. After five years, an operator like IOC-Adani will have system (that is pipeline) exclusivity for 25 years, meaning no other company can lay a pipeline network and would have to necessarily request it to use its network to retail piped gas and CNG to automobiles. 

But the regulations do not specify the extra capacity the operators would have to create in the system for usage by others and so third parties can be turned down on the pretext of no capacity, they said.Experts believe if retail prices are not regulated and regulations create monopolies, the consumer interest is bound to be compromised.     

The other bidding criterion is the length of a pipeline a company proposes to lay in a city and the number of consumers it proposes to sell the gas to.     

In some cases, companies have indicated enrolling more consumers than the population in that area, again making a mockery of the PNGRB's regulations, they said.