New Delhi, Nov. 17: The Petroleum and Natural Gas Regulatory Board (PNGRB) has invited bids for piped gas in eight cities, including one in Bengal, that will generate aggregate investments of Rs 3,000 crore.
Residents of Ludhiana and Jalandhar (Punjab), Panipat (Haryana), Asansol-Durgapur region (Bengal), Jamnagar district, Kutch (east), Kutch (west) and Bhavnagar district in Gujarat will benefit from this move. The last date for submitting the bids is December 3, officials said.
At present, only about half a million people in the country get piped gas in their kitchens, which is about 30 per cent cheaper than traditional cooking fuel.
Sources said prospective bidders were aggressively lobbying GAIL Gas Ltd, a wholly-owned subsidiary of GAIL (India) Ltd, to become their partners on the back of the firms success in previous bids.
Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation, Essar Oil, Great Eastern Energy Corporation Ltd, Gujarat State Petroleum Corporation and BG India have held discussions with the state-owned firm to jointly bid for distribution rights.
GAIL, sources said, is likely to agree to form an alliance with a strategic partner for each city on a case-to-case basis. GAILs decision to bid for a city will depend on the importance of the city and competition expected in the bidding.
The average cost of setting up a city gas distribution network is around Rs 300-400 crore. The governments target is to roll out networks in about 200 cities over the next five years. This will involve an investment of over Rs 60,000 crore.
The winners will get 25-year exclusivity on the use of infrastructure and five years marketing exclusivity.
Analysts say only 5-6 per cent of the available gas, or 5-6 million standard cubic metres per day (mscmd), are used for city distribution. The consumption is set to increase four-fold in a few years.
Bids will be evaluated on a number of criteria — tariff, transportation costs, compression charges and number of households, being some of them — with different weights assigned to them.
While tariff will have a weight of 40 per cent, number of households will have a 30 per cent weight — meaning bidders are likely to win if their tariffs are lower and they try to reach as many households as possible.
Weights for transportation costs and CNG compression charges are 10 per cent each.
The government plans to extend the reach of city gas to 20 million households over the next few years.