RIL loses interest in city gas distribution

Withdraws after winning bid to lay pipelines in 3 cities; UP Gas also seeks more time

Mukesh Ambani’s Reliance Industries has decided to keep away from the business of city gas distribution (CGD). Reliance Gas, which had successfully bid for three cities — Rajahmundry in Andhra Pradesh, Shahdol in Madhya Pradesh and Yanam in Pondicherry — during the second round of bidding for CGD in 2009.

"RIL  recently told us it is no longer interested in laying the pipelines in these cities," a senior official from the Petroleum and Natural Gas Regulatory Board (PNGRB) said.

The official added that they might put these three cities on auction again.

RIL did not reply to an email questionnaire sent last week.

Central UP Gas, which won the bid to lay pipelines in Jhansi, Uttar Pradesh, has sought more time from PNGRB on the issue.

"Dynamics of city gas distribution have changed since 2009. RIL  is no longer interested in the business," said the chairman & managing director of one of the participating companies.

Depending on the area, the cost of establishing the CGD business could be at least Rs 500 crore. But the network needs continuous expansion and thus investment.

In February, PNGRB issued licences for piped natural gas in six cities.

While the joint venture between Indian Oil Corporation (IOC) and Adani Gas won bids for Allahabad and Ghaziabad in Uttar Pradesh, and Chandigarh, Central UP Gas won Jhansi and Reliance Gas got the three cities.

These cities were expected to get the piped gas services by the year 2014.

In May, PNGRB said it would clear the third round of city gas distribution soon. The round was launched in 2010, where IOC, Adani Energy, Gujarat State Petroleum Corp, Engineers India and GAIL Gas were among the 26 companies that made 51 bids.
SECOND THOUGHTS

• Reliance Gas had successfully bid for three cities — Rajahmundry in Andhra Pradesh, Shahdol in Madhya Pradesh and Yanam in Pondicherry — during the second round of bidding for city gas distribution in 2009
• Now it has sought to withdraw from laying pipelines in these cities
• A Petroleum and Natural Gas Regulatory Board official has said that they might put the three cities on auction again