After a three-year wait, the Petroleum and Natural Gas Regulatory Board (PNGRB) has begun awarding city gas licences, with Jay Madhok Energy pipping the likes of Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum (HPCL), GAIL Gas, IOC-Adani and BPCL to win the rights to sell CNG (compressed natural gas) and piped gas in Jalandhar.
The oil regulator on September 6 allowed city-based Jay Madhok Energy Pvt Ltd to sell CNG to automobiles and piped cooking gas to households in Jalandhar for 25 years.
In all, 26 companies submitted 51 bids for the seven cities offered in the third round of auction of city gas distribution licences in July 2010 Asansol-Durgapur in West Bengal; Bhavnagar, Kutch-East, Kutch-West and Jamnagar in Gujarat; and Ludhiana and Jalandhar in Punjab.
Jalandhar attracted the second highest bids, with 12 firms in the fray, including HPCL, GAIL Gas, Indraprastha Gas, Indian Oil-Adani Gas, GSPC Gas, BPCL-ONGC-OIL, Lanco Infratech, HCC Infrastructure and Jay Madhok Energy.
Jay Madhok Energy is considered the favourite to win Kutch-East and Ludhiana, the city that received the most bids, with offers from 16 companies. Licences for these and other cities are yet to be decided by the regulator.
PNGRB, in its September 6 order to Jay Madhok Energy, said the company has to start laying the gas distribution network "within a period of 180 days from the date of this authorisation."
The network will cover an area of 338 square km in Jalandhar and the company is likely to begin selling gas there within a year, with sales estimated to reach 2.5 million standard cubic meters per day in five years.
Jay Madhok Energy has already tied up gas supplies. The PNGRB said the firm would add 46,800 customers every year in the first four years.
In response to the auction, Kutch-East received eight bids, Asansol-Durgapur received seven, while Kutch-West and Jamnagar district received four and two bids, respectively.
Bids were made on four aspects network rate, inch kilometres of steel pipelines, number of domestic connections in the first five years and compression charges from six to 25 years.
The network rate had the highest score of 40, while the number of domestic connections was given a weightage of 30.
Compression charges and inch kilometres of steel pipelines carried weightages of 10 and 20, respectively.
The PNGRB has planned a phased rollout of the city gas distribution network, covering more than 300 cities and towns across various states.