All eyes on HPCL authorisation for Ahmedabad CGD

Vol 12, PW 13 (13 Nov 08) Midstream & Downstream

Gas sector observers in Gujarat say Hindustan Petroleum’s application to the regulator to endorse its CNG business in Ahmedabad will be an important “test case.

â€‌ Last month, the Petroleum and Natural Gas Regulatory Board posted a notice inviting comments on HPCL’s application, the first of its kind relating to the long pending, controversial issue of authorising retail gas companies already operating. With 15 stations selling 30,000-kg/day, HPCL joins Adani Energy with 50 CNG stations selling a total 180,000-kg/day, as the second dominant player in Ahmedabad.

But in June this year Reliance submitted Expressions of Interest (EoIs) to bring gas to kitchens and businesses through new city gas network companies in 52 cities across India, including Ahmedabad. No doubt, HPCL wants to secure its position faced with competition from the private-sector giant.

“There’s unlikely to be any objections from would-be competitors such as Reliance because Adani and HPCL have covered Ahmedabad well leaving no space,â€‌ says a source. Observers tell us the process of authorising HPCL’s gas retail business, with comments expected within a month, will be keenly watched by all gas sector players to understand the mindset of the Board.

“They (the Board) want to see what kind of comments and objections come in,â€‌ we hear. “That’s why they started off with the relatively small network of HPCL before the larger networks.

â€‌ Among the â€کlarger existing networks’ awaiting the Board’s authorisation are those operated by the following companies: Adani, Gujarat Gas, GSPC Gas, Vadodra Municipal Corporation, Mahanagar Gas and Indraprastha Gas. Even though HPCL is likely to receive endorsement, it will be bound by several conditions, among them: restrict itself to the existing network of one 7000-sq metre mother station at Nana Chiloda in Ahmedabad and 15 daughter booster stations; no marketing exclusivity; no new pipelines or expansion of its existing pipeline network.

HPCL will also be obliged by the Board to meet the CNG requirement of any other “entityâ€‌ in Ahmedabad subject to “availability of compression capacityâ€‌ in its authorised online network of 15 CNG stations.