The Petroleum and Natural Gas Regulatory Board (PNGRB) released new rules on bidding for obtaining a licence to retail compressed natural gas (CNG) and piped natural gas (PNG) in cities.
Under the fresh parameters, future auctions would be conducted by asking companies to quote the number of CNG stations to be set up, while for PNG it would be the number of domestic cooking gas connections to be given in the first eight years of operation. Bidders quoting higher numbers of these would be given more marks.
The previous criteria for winning a licence - the tariff charge for transporting CNG and or PNG within the city - has been given just 10% weightage under the new regulations.
The number of CNG stations and PNG connections to be released command 70% of the bidding weightage.
Bidders will also be required to quote the length of pipeline they would lay on winning the licence.
Entities having experience of at least one year in operation and maintenance of a city gas distribution (CGD) network and having sufficient technically qualified personnel would be eligible for bidding, as per the terms of the bid.
Companies with net worth of no less than Rs 150 crore can bid for cities with population of 50 lakh and above, while Rs 100 crore is the minimum requirement for cities with population of 20 lakh to 50 lakh.
A company with a Rs 5 crore net worth firm is eligible to bid for cities that have less than 10 lakh population.
According to PNGRB, the successful CGD licence bidder would have to enter into a firm natural gas supply agreement with a natural gas producer or marketer in a transparent manner on the arm's length principle within 180 days of winning a license.
The winning company would have eight years of marketing exclusivity in the given city, which is an increase from the current 5-year licences.
So far, the petroleum regulator has undertaken eight rounds of bidding. While the last few rounds of CGD have drew lukewarm response, the fourth round was scrapped altogether.