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

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

Tag: IOCAdaniCNG
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