Rs 1.1 trillion lined up for city gas distribution over next 10 years

India is set to get an investment of around Rs 1.1 trillion in city gas distribution (CGD) over the next 10 years.

The investment will come in areas allotted during the ninth round of auctions and 50 areas that will be allotted under the 10th round of bidding.

Prime Minister Narendra Modi will launch the 10th CGD bidding round in 124 districts (50 areas) of 14 states on November 22 at Vigyan Bhawan in New Delhi. 

Along with this, he will dedicate networks in 65 geographical areas of a total of 86 allotted in the ninth round. Companies are being given eight years to develop infrastructure in the areas allotted to them.

“We expected an investment of around Rs 700 billion in the ninth round and another Rs 400 billion during the tenth round. This is compared to nearly Rs 180 billion invested in India so far during the first eight rounds,” said a government official. 

The Petroleum and Natural Gas Regulatory Board (PNGRB), which is in charge of the bidding, has said the new areas will be awarded by the end of February next year.

The 10th round will cover 24 per cent of the country’s population and 18 per cent of its area. According to the PNGRB, after this round around 70 per cent of India’s population, 52 per cent of the area and 402 districts, spread over 27 states, will be covered under CGD.

Currently, the CGD network covers approximately 20 per cent of India’s population and 11 per cent of its geographical area.

The move is part of the government’s strategy to increase the share of natural gas in India's energy basket from 6.5 per cent now to 15 per cent by 2030.

According to the timelines set by the regulator, a pre-bid conference is scheduled for December 6, and the last date for bid submission is February 5, 2019. Technical bids will be opened by February 9 and the letters of intent are expected to be issued by the end of February. According to officials, the round is expected to see a better response, based on the existing bidding norms. Compared to the norms till the eighth round, which had a five-year exclusivity period, the government is giving a marketing exclusivity period of eight years, extendable by two years.

In the ninth round, 21 companies participated, including two foreign investors and six new investors. The work commitment for the ninth round included a provision of about 22.1 million piped natural gas domestic connections, instal­ling 4,603 compressed natural gas (CNG) stations and laying 116,171 inch-km of steel pipelines.