Adani Group bids for UP and Haryana CGD licences

Vol 9, PW 12 (22 Sep 05) Midstream & Downstream

Gujarat-based Adani Group wants to expand its successful City Gas Distribution business beyond Ahmedabad into Haryana and Uttar Pradesh.

On 28th August, state authorities in Haryana issued the Adani Group a CGD licence to begin operations in the industrial township of Faridabad on the outskirts of Delhi. Adani estimates that Faridabad would need about 400, 000 cm/d gas, rising to about 1m cm/d in eight or nine years.

Adani plans to invest approximately Rs100cr ($22m) in Faridabad, mainly in setting up CNG filling stations, but also to set up a Piped Natural Gas network to supply industries and households. In Uttar Pradesh, Adani was one of three companies to submit a bid for CGD licences to operate in Khurja, Noida and Ghaziabad in a tender that closed on 12th September.

Indraprastha Gas - a joint venture between Bharat Petroleum and GAIL - and the relatively unknown Haryana City Gas Distribution Company also bid. A winner should be announced this month.

Adani estimates that Khurja will need about 1m cm/d in mainly Piped Natural Gas while Noida and Ghaziabad are seen as CNG opportunities, each with a demand of about 400,000 cm/d. Adani expects to win at least one of the three UP licences.

Haryana and Uttar Pradesh are issuing CGD licences following a recent Supreme Court deadline to reduce car and industrial pollution by 31st December. Gas sector analysts stress Adani must tackle the key issue of accessing the HBJ to transport gas to Faridabad and UP.

GAIL might decide not to allow the Adanis the use of the HBJ or it might arbitrarily decide to supply gas only to IGL. What is the solution The Adanis will have to either work with GAIL or lobby the oil ministry and Haryana government to get access to the HBJ.

As for the source of gas, it will be a mixture of subsidised domestic (APM) gas for the CNG network and deregulated domestic gas or regassified LNG from Dahej or Hazira for the piped natural gas network.