Expanding Coverage

Progress under the latest CGD bidding round

The share of natural gas in the primary en­ergy mix increased from 6.3 per cent in 2020 to 6.7 per cent in 2021. The gover­n­­ment aims to take this to 15 per cent by 2030. In a bid to meet the increasing demand for compressed natural gas (CNG) and piped na­tu­ral gas (PNG), the gas allocation policy has placed the city gas distribution (CGD) sector at the top in terms of priority.

The CGD sector has also witnessed steady growth in infrastructure development. In Sep­tem­ber 2021, the Petroleum and Natural Gas Re­gu­latory Board (PNGRB) launched the 11th CGD bidding round for 65 geographical ar­eas (GAs). It received 439 bids from 26 entities for 61 GAs, with four GAs in Chhattisgarh receiving no bids. As of February 2022, letters of intent (LoIs) for 52 GAs have been issued by the PNGRB to 13 entities. Bids for the remaining GAs were withheld due to elections in their res­pective states. As of this round, the PNGRB had authorised a total of 289 GAs. Under the 11A CGD bidding round, the PNGRB invited bids for six more GAs covering 28 districts in six states. Technical bidding for five GAs was opened on April 8, 2022, and 21 bids were received from seven bidders. Based on the financial bids, LoIs were issued to three successful entities for five GAs. The bids for the sixth GA, Yaman, were opened on May 12, 2022, and seven bids have been recei­ved. After the completion of the 11th and 11A CGD bidding rounds, the CGD network is expected to cover 98 per cent of the population and 88 per cent of the geographical area of the country.

Of the 61 GAs put up for bidding in the 11th CGD bidding round, 12 were won by Meg­ha Engineering and Infrastructure Limited (MEIL), and 14 were secured by Adani Total, a joint venture (JV) between the Adani Group and Fr­e­n­­ch energy major Total. Indian Oil Corpo­ration Limi­ted (IOCL) and Bharat Petroleum Corpo­ration Limited (BPCL) won eight and four GAs respectively, while Navi Mumbai-based Dinesh Engine­e­rs won two GAs. The majority of GAs, totalling 23, were won by central and state public sector undertakings (PSUs), including IOCL and BPCL. State government PSU Assam Gas secured th­ree GAs, followed by Maharashtra Natural Gas with two GAs. Meanwhile, central PSUs Hindus­tan Petroleum Corporation Limit­ed (HPCL), GAIL, and Indraprastha Gas Limited secured bids for one GA each. The successful bidders will reportedly have to construct city gate stations or mother sta­tions, lay the main pipelines as well as dis­tri­bu­tion pipelines, and install CNG stations in their respective areas. Under the 11A bidding ro­und, HPCL, BPCL and GAIL were awarded two, two and one GA respectively.

The GAs allotted to MEIL are located in Ma­d­hya Pradesh, Rajasthan, Maharashtra, Odis­ha, Tamil Nadu, Karnataka and Telangana. Pri­or to the 11th bidding round, MEIL had won th­ree GAs (in Karnataka, Andhra Pradesh and Te­langana) in the 10th CGD bidding round. Arou­nd 32 CNG stations are currently operational in the three states under the brand. Meanwhile, the CGD footprint of BPCL, along with its JVs, will now extend to 48 GAs covering 94 districts in 18 states across India. Currently, with a presence in 63 districts, including prominent cities, BPCL together with its JVs holds a 33 per cent market share in the country’s CGD sector. Of the licences it holds, BPCL has commissioned CNG and PNG supplies in various locations in Maharashtra, Uttar Pradesh, Himachal Prade­sh, Punjab and Haryana.

Meanwhile, the GAs acquired by IOCL, In­dia’s largest downstream energy major, in the 11th bidding round include major districts such as Jammu, Pathankot, Sikar, Jalgaon, Gun­tur (Amravati), Tuticorin, Tirunelveli, Kanyakumari, Ma­durai, Dharmapuri and Haldia (East Mid­na­pore). At present, IOCL, along with its two JVs, is present in 49 GAs and 105 districts spread across 21 states and union territories, making it one of the most significant CGD players in the country. On a standalone basis, IOCL has a presence in 26 GAs and 68 districts.

The road ahead

The 11th bidding round has given further impetus to the development of CGD infrastructure in the country. An investment to the tune of Rs 800 billion is envisaged for setting up the CGD infrastructure for the 61 GAs. The focus has shifted to untapped market areas where pipe­line infrastructure is lacking. BPCL reportedly plans to invest Rs 100 billion over the next five years in setting up CGD networks in the districts for which it has secured licences in the latest bidding round. With this, BPCL’s committed investment in the CGD network, on a standalone basis, would increase to over Rs 220 billion for the development of 23 GAs. Similarly, IOCL plans to invest over Rs 70 billion in new CGD projects, over and above the Rs 200 billion already planned for its CGD vertical. W

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