IOC-Adani quotes zero tariff; win CNG rights for two cities

Last Updated: Monday, August 10, 2009 - 19:08

New Delhi: Indian Oil Corp and Adani Energy
combine has bagged rights to retail CNG to automobiles and
piped gas to industries in Chandigarh and Allahabad by quoting
a nil or zero pipeline tariff.

Petroleum and Natural Gas Regulatory Board (PNGRB) had
asked the companies to quote only the tariff that they will
charge for transporting gas within the perimeters of a city
and left the final selling price of the fuel for the companies
to decide.
This provision of `zero` tariff, sources said, is made up
by companies through CNG charges levied from users - household
or industries - as they deem fit.

Industry sources said PNGRB today opened price bids for
two cities to discover that IOC-Adani combine had quoted zero
pipeline tariff for 25 years in Chandigarh and the same for 7
years in Allahabad.

On top of this, the PNGRB has also allowed a 5-year
marketing exclusivity to the winning company.

Even after 5 years, the operator like IOC-Adani will have
system (that is pipeline) exclusivity for 25 years, meaning no
other company can lay a pipeline network and would have to
necessarily request them to use their network if they want to
retail CNG to automobiles and piped gas.

But the regulations do not specify the extra capacity the
operators would have to create in the system for usage by
others and so third parties can be turned down on pretext of
no capacity, they said.

Sources said in Allahabad, the IOC-Adani joint venture
was in a direct fight with GAIL Gas Ltd, the city gas
subsidiary of state gas utility GAIL India Ltd. Chandigarh saw
a four-cornered contest among IOC-Adani, HPCL, GAIL Gas and

The other bidding criteria was the length of pipeline a
company proposes to lay in the city and the number of
consumers they propose to sell the gas to.

In some cases, companies have indicated enrolling
consumers even more than the population in that area, again
making a mockery of PNGRB`s regulations, they said.

Along with Chandigarh and Allahabad, Jhansi, Shahdol and
Yanam had also been put on auction but had received single
bids - GAIL Gas for Jhansi and Reliance Gas - a unit of
Reliance Industries for Shahdol and Yanam. Owing to the single
bids, PNGRB had extended the bid deadline by a month for these
cities but only Avantika Gas made a bid for Shahdol.

In all seven cities were put on auction, the other two
being Ghaziabad and Rajahmundry the bids for which are likely
to be opened on August 13.

Ghaziabad had witnessed the fiercest competition, with
IOC-Adani, HPCL, GAIL Gas, IGL, Siti Energy and GSPC Gas in
the fray. Rajahmundry has IOC-Adani, Reliance Gas and
Bhagyanagar Gas Ltd contesting, they added.

Bureau Report

First Published: Monday, August 10, 2009 - 19:08

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