Six city gas projects get authorisation

More than a year after the Petroleum and Natural Gas Regulatory Board (PNGRB) gave authorisation for city gas distribution (CGD) in six cities, the government has issued authorisation rights for these cities to GAIL Gas Ltd, Bhagyanagar Gas and Saumya-DSM Infratech.

“We had to authorise winners of the first round of bidding, since the board had no powers to authorise CGD network due to non-notification of Section 16 of the PNGRB Act,” said a ministry official. The section authorises the regulator to lay, build, operate or expand a city or local natural gas distribution network. The section was not notified by the government when the PNGRB Act came into force on October 1, 2007. It was notified on July 15 this year. The board can now authorise CGD networks and it is in the process of floating a third round of the CGD network, in which bids will be invited for eight cities.

In the first round, completed early last year, the board had invited bids for six cities — Kakinada in Andhra Pradesh, Mathura and Meerut in Uttar Pradesh, Kota in Rajasthan, Dewas in Madhya Pradesh and Sonepat in Haryana. GAIL Gas, a subsidiary of GAIL India, and Bhagyanagar Gas Ltd, a joint venture of GAIL India, had won the CGD rights in bids for five of the six cities last year. Another company, Saumya-DSM Infratech, had bagged CGD rights for Mathura.

Bids were invited for seven cities in the second round — Allahabad, Ghaziabad and Jhansi in Uttar Pradesh, Shahdol (Madhya Pradesh), Rajahmundry and Yanam (Andhra Pradesh) and Chandigarh. However, this round got stuck in a legal tussle between Indraprastha Gas Ltd and the board on CGD rights for Ghaziabad. IGL, which was keen to enter the CGD business in Ghaziabad, approached Delhi High Court, claiming the board had no powers to conduct CGD bidding. In an order issued on January 21, the Delhi High Court had struck down the powers of PNGRB to issue authorisation for CGD projects due to the non-notification of Section 16. The order also said the board could not invite bids for Ghaziabad and directed it to give a fresh hearing to IGL’s case application of pre-PNGRB authorisation. IGL, however, did not go back to the board.

Both these decisions have been challenged by the board in the SC. Since the high court order had struck down the board’s power to issue authorisation for CGD business, the ministry had gone ahead to authorise IGL for Ghaziabad.