Awkward questions leave PNGRB speechless

Vol 14, PW 9 (21 Oct 10) Midstream & Downstream

Christopher Columbus landed in America only to discover people there before him.

Gas retailers bidding to set up new networks in parts of West Bengal and Gujarat are experiencing a similar feeling - established players already operate in these areas. PETROWATCH learns concerns were raised on September 30 at a city gas pre-bid meeting at the Delhi office of the Petroleum & Natural Gas Regulatory Board, chaired by Board member BS Negi.

Essar, ONGC and real estate company IndiaBulls demanded ‘clarity’ about Great Eastern Energy’s presence near the Asansol-Durgapur area in West Bengal, offered in this round. “If Great Eastern is already there,” asks a worried potential bidder, “will they be told to stop expanding or treated as illegal and asked to quit; or can they operate alongside whoever gets the licence” Adani Energy and Bharat Petroleum likewise wanted clarity about Bhavnagar city and the Kutch East and West areas in Gujarat, also offered.

“GSPC Gas has a strong presence in these regions,” we hear. “We want to know the ground realities upfront and don’t want surprises if we get the licence and begin work on the ground.

” Some bidders wondered if large areas like Kutch East and West, which each measure about 1600-sq km, can be covered with a network within five years, as required by the Board. Others were unclear about whether the qualification criteria applied to parent or subsidiary companies.

Queries were also raised about the stipulation that bidders should show a minimum 6% ‘Internal Rate of Return (IRR)’ for each area, ostensibly laid down to thwart bidders from quoting zero network tariffs. Sadly for participants, Board members BS Negi, YC Dange, Sudha Mahalingam and LK Singhvi had few answers and said they would “revert”.