Ninth city gas distribution bidding may fetch Rs 700 billion, says report

The ninth round of the city gas distribution (CGD) licences auction, beginning this week, may see funds worth Rs 700 billion from winning bidders, which is four times the cumulative Rs 150-180 billion invested till fiscal year 2018, said a report. “The ninth round of auction of city gas distribution licences is set to alter the industry landscape with the government expecting investments of Rs 700 billion from winning bidders, or four times more than what was invested so far," Crisil said on Monday. On offer are 86 geographical areas in 174 districts covering 29 per cent of the population, compared with a cumulative 56 geographical areas awarded in the previous eight rounds in the past 10 years. The new geographical areas on offer include Chennai, Coimbatore, Visakhapatnam, Aurangabad and Bhopal, which have good demand potential.    

“We expect the ninth round to receive way better response because of revised bidding norms, and the push from Centre through favourable policies,” Crisil said, and pointed out the new norms like marketing exclusivity period of eight years which is extendable by two more years, compared with years earlier, tariff floors to discourage unviable bids, removal of additional bid bond requirement and evaluation of bids based on higher infrastructure creation as winnable factors.