City gas bidding result: Who gains what?

After announcement of the results of the 10th round of the City Gas Distribution (CGD) bidding for 50 geographical areas (GA), the stocks of downstream gas companies — Indraprastha Gas (IGL), Gujarat Gas, Mahanagar Gas (MGL) — witnessed positive momentum.

– A total of 12 companies have grabbed 50 GAs (124 districts) from a total of 225 bids received

CGD1

Source: Petroleum and Natural Gas Regulatory Board

– Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and a consortium of AG&P LNG Marketing Pte and Atlantic Gulf & Pacific Company of Manila emerged as clear winners with nine geographies each being allocated. GAIL (India), Gujarat Gas and IGL also followed suit with four, six and three GAs, respectively. Adani Gas won two areas individually and one in collaboration with IOCL.

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– This latest allocation plans to add 2,02,92,760 domestic PNG (piped natural gas) connections and 3,578 CNG (compressed natural gas) stations for transport sector by March 31, 2029. Almost 70 percent of India’s population (from the current 50 percent) and 53 percent of its geographical area would be covered under the CGD system after this allocation.

Outlook

Allocation of complementing geographies stands as a positive for the downstream gas companies and would facilitate higher utilisation of the existing infrastructure, thereby bringing added operating efficiencies in the long term.

Gujarat Gas is the largest CGD player in India, supplying 6.8 million standard cubic feet per day (MMSCMD) gas to Gujarat, Palghar and Thane rural areas. Increasing adoption of PNG industrial gas as the primary fuel augurs well for the company’s growth. The company has won Sirsa, Fatehabad, Mansa, Ujjain, Dewas, Indore, Jhabua, Banswara, Ratlam, Durgarpur, Ferozepur, Faridkot, Sri Muktsar Sahib, Hoshiarpur, Gurdaspur, Jalore and Sirohi in the current round. This allocation shows an aggressively expanding presence of Gujarat Gas in north and west India and would enable volume expansion, which has been a concern for a while.

IGL currently has a strong presence in NCR and adjoining areas, which have the largest vehicle population in India and the company supplies around 5.3 MMSCMD gas currently. IGL has won bids for Kaithal, Ajmer, Pali, Rajsamand, Kanpur, Fatehpur and Hamirpur. This allocation would enable IGL to further strengthen and expand its presence in north India and bring added operational benefits.

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First Published on Feb 27, 2019 04:02 pm

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