PNGRB likely to extend deadline by at least 3 months for city gas players

In a move that may help at least 41 companies, which were part of the ninth and  tenth rounds of city gas distribution (CGD) bids, the Petroleum and Natural Gas Regulatory Board (PNGRB) is likely to extend the deadline for completing the committed works by at least three months. This comes after several companies had approached the downstream regulator to invoke the force majeure clause.

A total of 136 geographical areas (GAs) were on offer in the ninth and tenth rounds of CGD bids. Companies had committed around 42.3 million piped natural gas connections, 8,181 compressed natural gas stations and 174,000 km of steel pipeline network by 2029 under the two rounds. “The PNGRB is planning to extend the deadline. Over 50 per cent of the companies that were part of the ninth and tenth rounds have approached for invoking the force majeure clause,” said a person in the know.

The deadlines are also likely to be extended for those companies, which were part of the seventh and the eighth rounds. Other reliefs for the industry will be based on policy initiatives taken by the government, the source said.
 

With the completion of the tenth round, the CGD network will be available in 228 GAs, comprising 402 districts spread over 27 states and Union Territories covering approximately 70 per cent of India’s population and 53 per cent of its geographical area. The regulator was also in the process of coming up with bids for the eleventh round, covering 44 GAs with the majority coming under Tamil Nadu (eight), Maharashtra (seven), and Madhya Pradesh (six). With the extension of the lockdown, the eleventh round of CGD bidding is expected to get delayed.
 

The eight-year deadline for the ninth round was set to be over by September 30, 2026, and that for the tenth round was supposed to be over by March 31, 2029.
 

Companies, which fail to meet the deadline, are supposed to pay a penalty. At present, India has 5.63 million domestic, commercial and industrial PNG connections, 1,758 CNG stations and 50,216 km of steel pipeline infrastructure.
 

Of the total consumption of natural gas in India, around 30 per cent is consumed by the fertiliser sector; 19 per cent comes under the CGD. Other major consumers include power firms (18 per cent), refineries (15 per cent), and petrochemical companies (6 per cent).
 

Following the investment boom in the CGD sector, SBI Chairman Rajnish Kumar had said that the solar and the city gas segments were the bright spots for funding, despite a slowdown in the economy. “Credit offtake is visible in the sector. We have already committed investments to the tune of around Rs 1.2 trillion -- Rs 70,000 crore in the ninth round and Rs 50,000 crore in the tenth round,” D K Sarraf, chairman of the PNGRB had told Business Standard last month.