Adani protests HPCL growth plans in Ahmedabad

Vol 15, PW 2 (28 Jul 11) Midstream & Downstream

Adani Gas has issued a fierce protest against state-owned Hindustan Petroleum’s plans to expand its CNG business in Ahmedabad.

Last year HPCL sought permission from the Petroleum & Natural Gas Regulatory Board to set up eight more CNG dispensing units at its petrol stations in the Gujarat city, which has a population of approximately 5.4m. This is in addition to the 15 CNG dispensing units it already operates in Ahmedabad, the traditional territory of Adani which operates the local city gas distribution network.

Incensed by HPCL’s move, Adani Gas chief Rajeev Sharma wrote to the PNGRB on July 15. “Granting permission for additional CNG stations to HPCL will adversely affect our business plans,” he said.

Sharma further accuses HPCL of opportunism and of following “unethical business practices” to profit from the market for CNG created through the efforts of private sector players like Adani. He alleges that HPCL often cuts CNG supplies to Ahmedabad to avoid sourcing expensive R-LNG, thus safeguarding its profit margins.

“HPCL’s CNG service in Ahmedabad is today the poorest and least preferred option by consumers,” writes Sharma. He adds HPCL has an unfair advantage, as it gets cheap domestic gas supplies for its Gujarat CNG business, unlike Adani which must depend solely on R-LNG.

Adani has invested Rs550cr ($119m) over the last six years to set up 47 CNG stations in Ahmedabad and a pipeline network to supply gas to local factories, businesses and households. “We have set a new standard in the city gas distribution business without the support of cheap gas allocations and despite stiff market conditions,” says Sharma.

Contacted by this report, HPCL defends its Ahmedabad CNG business. “Adani is free to say whatever it wants,” said an HPCL official.

“But we give a good service in Ahmedabad and want to expand.”