City Gas Distribution Auction: It’s Adani Vs The Rest

India is expected to complete its second-largest auction to distribute piped natural gas in urban areas by February-end as the world’s third-biggest oil importer looks to reduce dependence on dirtier fuels to curb emissions and switch to cleaner alternatives.

The Petroleum and Natural Gas Regulatory Board recently opened bids for the tenth round of city gas auction which offers 50 geographical areas covering 124 districts. The board had identified 192 areas in the last 10 years of which bids were awarded for 140 areas.

More than 225 bids were received for the offered areas with an investment commitment of nearly Rs 50,000 crore, the regulator said in a statement. Bids have been invited on a large scale to fast-track expansion of city gas distribution networks as the government seeks to raise the percentage of natural gas in domestic gas sales mix from 6.2 percent to 15 percent in next few years.

India is home to the maximum number of cities with the most toxic air. Over one lakh children under the age of five died in the country in 2016 due to exposure to toxic air, according to a World Health Organization study. Efforts to increase the usage of natural gas as a kitchen and auto fuel will, thus, help curb emissions.

After the tenth round of city gas auction, 52 percent of the country’s area and 70 percent of its population will be on the city gas distribution network. The auction will help city gas distributors like Indraprastha Gas Ltd., Gujarat Gas Ltd., Mahanagar Gas Ltd. and Adani Gas Ltd. increase their networks.

Adani Gas bid for maximum number of areas in the tenth round, followed by Indraprastha Gas. Gujarat Gas and the joint venture between Adani Gas and IOCL had bid for seven areas each.

Adani Gas

After winning the maximum number of areas in the ninth round, the company has once again placed most bids in the next round. It won 13 areas in the last round and in this round, it has placed bids for another 19 areas in Karnataka, Madhya Pradesh, Uttar Pradesh, Punjab, Rajasthan and West Bengal. It has placed bids for eight areas where not more than five other entities have participated.

Indraprastha Gas

The company has bid for 15 areas in the tenth round after winning only one new area in the last auction. Eight of those areas are adjoining, which can result in greater potential synergies. The state-run gas distributor has placed bids for six such areas where over five other entities have participated.

Gujarat Gas

Gujarat Gas has placed bids for seven areas of which the largest is in Rajasthan. In the last round the company had bid for 21 areas of which it managed to win only one due to stiff competition. Similarly, in this round also six areas have received bids from more than five entities.

Adani-IOCL Joint Venture

The joint venture between Adani Gas and India’s largest oil refiner and marketer Indian Oil Corporation Ltd. has put in bids for seven areas of which six have low competition. Not more than five entities have placed bids for six of those areas, thereby increasing the chances of winning there. The joint venture bagged nine areas in the last round.

Mahanagar Gas

The Maharashtra-based city gas distributor has placed bids for only two areas which have high competition, with bids from 10 entities. In the last round, MGL placed bids for three areas and won none of them.