RIL, Essar Oil, ONGC, Torrent in race for CNG retailing permit

Mumbai: Reliance Industries Ltd (RIL), Essar Oil Ltd, Oil and Natural Gas Corp. Ltd (ONGC) and Torrent Power Ltd are among companies planning to bid for the ninth round of city gas distribution (CGD), two people aware of the matter said. The Petroleum and Natural Gas Regulatory Board (PNGRB) will offer compressed natural gas retailing licences in 100 cities shortly.

The Petroleum and Natural Gas Regulatory Board (PNGRB) will offer compressed natural gas retailing licences in 100 cities shortly.

RIL, Essar Oil and ONGC did not respond to emails sent on 15 March.

The PNGRB has so far held eight rounds of bidding. The last few rounds of CGD bidding had seen lukewarm response.

This time around, the PNGRB is looking at a new model with a different bidding parameter. Last October, the regulatory body had called for industry comments on an alternative model of bidding criteria for CGD.

“To encourage wider participation, PNGRB has proposed to increase the exclusivity period and has pruned the minimum net worth criteria for bidders. This will encourage players to bid,” said a CGD consultant on condition of anonymity.

Companies with a net worth of not less than Rs150 crore can bid for cities with 5 million people, and those with Rs100 crore net worth can bid for cities with 2-5 million people. A Rs5 crore net worth company can bid for cities with less than 1 million people.

Companies which win CGD licence for a city would have eight years of marketing exclusivity in that city, against the existing five years. Also, entities with experience of at least one year in operation and maintenance of a CGD network and with adequate number of technically qualified personnel would meet the eligibility criteria for bidding.

“Also, companies securing a CGD licence will have to enter into a firm natural gas supply agreement with a natural gas producer or marketer and have to achieve financial closure within 270 days from the date of grant of licence,” the second of the two people mentioned above said.

The sixth round of bidding for 34 cities in 2015 saw only 20 bids. The seventh round for 11 cities received only one bid. Seven cities were offered in the eighth round last year but not all licences have been awarded so far.

PNGRB in its notice dated 16 January 2018 on the draft bidding regulations had invited comments by 2 February after which it will finalise the criteria. Many companies have replied to PNGRB’s notice, which the regulator has uploaded on its website.