9th City Gas Distribution (CGD) Bidding Round Roadshow at Bhopal

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    Petroleum and Natural Gas Regulatory Board (PNGRB) organised fourth roadshow on 9thCity Gas Distribution (CGD) Bidding Round atBhopalon 18.05.2018.

    As a major leapfrogging step in the area of distribution of natural gas across India,in the 9thCGD Bidding Round, PNGRB has offered 86 Geographical Areas (GAs) covering 174 districts (156 complete and 18 part), spread over 22 States and Union Territories (UTs) in India. These GAs cover 29% of India’s population and 24% of its geographical area.

    In the past, PNGRB has conducted 8 CGD bidding rounds during last 9 years resulting in award of 56 GAs. Including 29 GAs which were existing before PNGRB and 6 Government mandated GAs, till date 91 GAs have been authorised by PNGRB. Existing GAs cover 130 districts (102 complete and 28 part), spread over 24 States and UTs. The existing GAs cover a population of 24 Crore (19% of India’s population as per 2011 census) and 11% of its area. The existing areas have 42 Lakh domestic customers, 30 Lakh CNG vehicles, 1,350 CNG stations, 33,000 industrial and commercial customers. At present, about 25 MMSCMD of gas is sold by CGD entities which is 17% of country’s total gas consumption.

    After award of the GAs under offer, gas distribution would reach 286 districts (276 complete and 10 part) spread over 25 States/ UTs, covering 60 Crore people (49% of India’s population) and 35% area.

    The share of natural gas in India’s energy basket is 6.2% against the global average of 24.1%. The country is aiming to push share of natural gas to 15%, as gas is more environment friendly, cheaper than liquid hydrocarbons and enables to meet country’s commitment in COP21 on carbon emission. State of Gujarat has the distinction to have share of natural gas at 25% demonstrating India’spotential to achieve this goal. In line with this, PNGRB’s current focus is to increase the share of Natural Gas in India’s energy basket, to create infrastructure to support higher consumption of natural gas in India, to establish a transparent and vibrant natural gas market in India and to balance the interests of consumers, transporters and producers of natural gas.

    Bidding conditions forthe 9th CGD Bidding Round have been modified to make them Investor-friendly, at the same time keeping a focus on creation of infrastructure, after considering the industry response and detailed deliberations. For example, marketing exclusivity for the authorised entities has been increased from existing 5 years to 8 years, with a provision to extend the same up to 10 years based on physical performance of the entities. Gas pipeline companies have been required to provide connectivity to the CGD entity within 180/ 270 days. Performance bank guarantee (PBG) to be submitted by the entities has been capped at Rs 50 Crore and the requirement of additional bid bond has been discontinued. In bid evaluation criteria, 80% weightage has been given to creation of infrastructure.

    The bidding would close on 10th July, 2018 and PNGRB intends to finalise the award of GAs by October, 2018.

    Madhya Pradesh, also known as the heart of India in perspective of its topographical region, is the second biggest state in the country by area and fifth largest by population. The strategic location of Madhya Pradesh makes the state an attractive market for the investors in City Gas Distribution business.

    Principal Secretary – Food, Civil Supplies and Consumer Protection, NeelamShami Rao, in her address acknowledged theinitiatives taken by Ministry of Petroleum & Natural Gas and PNGRB for development of robust CGD network infrastructure in the state and assured all support from the state Government for development of City Gas Distribution Network in the State. Shri S Rath, Member, PNGRB, in his welcome address,shared that the “9thCGD BiddingRound”is a positive step in the direction ofmoving Bhopal, the capital city of Madhya Pradesh towards the environment friendly sources of energy.

    During the roadshow, representatives from GAIL, an existing investor in CGD, shared their experience in the sector and also highlighted the need to work together and leverage the opportunity available today and in future in CGD business.

    Shri Satpal Garg, Member, PNGRB, in his address to the audience, brought out the salient features of the 9thCGD Bidding Round.Dr. S.S. Chahar, Member PNGRB concluded the roadshow with his vote of thanks. He expressed gratitude to all the participants for taking out their valuable time to be part of the roadshow. The roadshow was a huge success and witnessed participation from Oil & Gas industry, Industry Associations, existing & prospective CGD investors, policy makers and the general public.