Jay Madhok wins Jalandhar gas licence

Vol 17, PW 1 (08 Aug 13) Midstream & Downstream

Delhi-based CGD newcomer Jay Madhok Energy is facing criticism for exploiting loopholes in bid parameters to win the CGD license for Jalandhar in Punjab.

PETROWATCH learns the PNGRB opened price bids submitted by 12 companies for Jalandhar on July 29 - three years after it launched India's third retail gas auction in July 2010. Price bids for six other geographical areas under the third round will be opened in the coming weeks: Asansol-Durgapur in West Bengal; Bhavnagar, Kutch (East), Kutch (West) and Jamnagar in Gujarat; Ludhiana in Punjab.

Jay Madhok won Jalandhar by promising to lay 24,000-inch km of steel pipeline in four years. Second was GAIL Gas, which committed to lay 2200-inch km of steel pipeline in the same duration.

"Jay Madhok's bid is unrealistic," says an Indraprastha Gas source. "It is next to impossible to lay 24,000-inch km steel pipeline in a geographical area spread over 2624-sq km.

This quantity of pipeline has not been laid by all the CGD companies in the whole country put together!" Jay Madhok has proposed a zero network tariff for the first 10 years and Rs0.01 for the next 15 years; compression charges of Rs0.01 for the first 24 years, rising dramatically to Rs43.08 ($0.7) in the 25th year. Incensed, GAIL Gas wrote a protest letter to the Board on July 29, demanding that the third round be scrapped.

"The Board should overhaul the bidding parameters," says a GAIL Gas source. "It should leave no scope for companies to submit irrational and uneconomical bids.