Doubts on bidding interest for six CGD networks

Vol 12, PW 12 (30 Oct 08) Midstream & Downstream

Interest in bringing CNG and piped gas to India’s under-developed hinterland will be put to the test soon, as six new towns are made available for bidding by India’s Petroleum and Natural Gas Regulatory Board.

PETROWATCH hears there may be few takers to the Board notification on October 23 that Kota (Rajasthan), Sonipat (Haryana), Mathura and Meerut (both in Uttar Pradesh), Kakinada (Andhra Pradesh) and Dewas (in Madhya Pradesh) are open to bidders that wish to set up CGD networks. The bid invite follows expressions of interest (EoI) in June from Reliance and GAIL, who are both interested in some of the six cities.

Kakinada and Meerut figure in a list of 52 cities for which Reliance submitted an EoI while GAIL has sent in EoIs for Mathura, Kota, Dewas and Sonipat. Gas sector sources tell us it is unlikely any other companies will bid against the two giants.

“Kakinada is a good town,â€‌ reports a source. “But with Reliance there, nobody will touch it.

â€‌ Ditto for Meerut, “which is an old town, where you can expect some decent CNG, domestic and commercial business.â€‌ He adds: “In Andhra Pradesh and its neighbouring states, Reliance will be the dominant player thanks to its KG gas.

It is pointless for any competitor to venture there.â€‌ GAIL is also expected to continue to dominate in and around Delhi because it controls the HBJ.

Another gas sector observer doubts if there would be any competing bids for Kota, Sonipat, Mathura and Dewas. “GAIL is already supplying industries in Kota and plans a CGD network,â€‌ we are told.

“I doubt GAIL would easily give (transmission) connectivity to a competitor.â€‌ Sonipat, we hear, is thinly populated “so there won’t be many CNG or PNG customersâ€‌ and Mathura is even worse even though it has an IOC refinery.

“The refinery will be supplied by GAIL and there’s no other industrial, commercial or domestic demand.â€‌