Get ready for another CGD licensing round

Vol 17, PW 3 (05 Sep 13) Midstream & Downstream

Before long, possibly this month (September) the PNGRB will revive India’s fourth retail gas licensing round.

Originally launched in October 2010 for eight cities, it was cancelled in November 2012 after several companies submitted unrealistic bids in the third round to exploit loopholes in bidding criteria to win. This time 12 cities are on offer and interested companies will get six months before submitting bids.

Anyone interested must be ready to finance the high cost of pipeline and gas distribution infrastructure but the reward is high: five-year gas marketing exclusivity. To prevent abuse the PNGRB is simplifying its system for the revived fourth round by scoring companies on two parameters only instead of four.

Companies must quote network tariff charges – in other words the cost per unit of gas to end-users – and compression charges, which cover the cost of pressurising gas to levels needed for distribution. These figures must be provided separately for each year of the 25-year life of the CGD network.

To further prevent abuse the PNGRB says network tariff cannot vary between two consecutive years by more than 10%. Network tariffs will have an increased scoring weightage of 70% instead of 40%; compression charges count for 30% of the overall score.

Companies can no longer bid for parameters like yearly gas volume targets per inch-km and household gas connections. These will be set by the PNGRB as the obligatory Minimum Work Programme (MWP).