India launches biggest auction of City Gas Distribution networks

India on May 8, 2018 launched its biggest auction of City Gas Distribution (CGD) networks, offering permits to companies for selling Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in 86 geographical areas. As per the Petroleum and Natural Gas Regulatory Board (PNGRB), that acts as a facilitator for the CGD network, this 9th CGD licensing auction is expected to attract investment of Rs 70000 crore. The last day for bidding is July 10, 2018.

Key Highlihts:-
1. This time, changes have been made to the bidding conditions to attract greater investment from the exercise, such as the granting of utilities status to CGD networks by the Union Labour Ministry.
2. 20 percent weightage has been given to the number of CNG dispensing stations.
3. 10 percent weightage gas been granted to the length of the pipeline to be laid in a geographical area and the tariffs proposed for city gas and CNG, each.
4. Under the changed parameters, maximum weightage of 50 percent has been given to the number of piped gas connections proposed in previous eight years, as against 30 percent earlier.
5. There is a floor tariff of Rs 30 for city gas and Rs 2 per kg for CNG to prevent bidders from quoting low tariffs.

The CGD auctions will help bring gas coverage to 174 districts in 22 states and Union Territories, covering around 29 percent of the country’s area and 24 percent of the population. So far, 91 geographical areas have been awarded to companies like Indraprastha Gas, GAIL Gas and Gujarat Gas, which cover 11 percent of area and 19 percent of the population. These existing CGD networks are concentrated in the northern and western regions of the country.

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