Oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has rejected Adani Gas Ltd's application for the license to retail CNG in Lucknow and instead granted the permit to a joint venture of GAIL India Ltd and Indian Oil Corp (IOC).
The PNGRB, in a March 15 order, said that it accepts central government authorisation to Green Gas Ltd, a joint venture of GAIL and IOC, for setting up city gas distribution (CGD) network in Lucknow.
Adani Gas Ltd (AGL) had applied to the Board on June 11, 2008, seeking grant of authorisation for Lucknow CGD saying it had commenced work in Lucknow before the appointed day, October 1, 2007, when the regulator came into being.
Green Gas approached the regulator on May 20, 2009, saying it had central government authorisation for retailing CNG to automobiles and supplying piped cooking gas to households in Lucknow prior to PNGRB coming into being on October 1, 2007.
PNGRB however found lacunae in its claims of physical progress and money spent prior to October 1, 2007, and so went by central government authorisation to Green Gas.
"AGL in support of its application submitted a no-objection certificate from Uttar Pradesh State Industrial Development Corporation Ltd for development of gas distribution network in Lucknow dated February 10, 2006," the order said.
The company also submitted various other statutory clearances and permissions obtained from various authorities.
Rejecting AGL's claim of having laid over 56% of the 53-km steel pipeline before October 1, 2007, PNGRB said physical progress was 30.21%.
Also, "AGL did not possess the land for city gate stations (for retailing CNG) before the appointed day (October 1, 2007) and did not have the firm gas tie-up as stipulated" and so was not in compliance with regulation," the order said.
It also found gaps in AGL's claim of having spent 35.74% of Rs 72.74 crore financial commitment for Lucknow.
An entity claiming to have started work prior to the establishment of PNGRB must have spent 25% of the investment earmarked in the detailed feasibility report.
"AGL has submitted the project cost report which states that the cost of the project as per DFR is Rs 109.24 crore in first five years of the project. (But) AGL has spent Rs 10.81 crore in the project till appointed date, which works out to be 9.89 per cent," the order said.
PNGRB said the company had in its submission dated August 18, 2015, taken the project cost only for 2007-08 to 2009-10 and not 2010-11 and 2011-12 so that their project cost comes out to be Rs 72.74 crore and not Rs 109.24 crore.
"The DFR clearly states that the first phase of project is for five years and the project cost is Rs 109.24 crore," it said.
The regulator said investment by AGL before the appointed day in Lucknow does not meet the requirement laid down in its rules, rejecting its application for Lucknow CGD.