City Gas Distribution networks: New norms to be finalised in Feb

Twesh Mishra New Delhi | Updated on January 25, 2018 Published on January 25, 2018

Dinesh Sarraf, Chairman, PNGRB

The Petroleum & Natural Gas Regulatory Board (PNGRB) will finalise the bidding criteria to develop City Gas Distribution (CGD) networks by February-end.

“We are seeking comments on the draft bidding guidelines that have been uploaded on the website. We hope to finalise the recommendations by February-end,” said PNGRB Chairman Dinesh Sarraf.

Talking about why the earlier CGD bid rounds had failed, Saraff told BusinessLine that then the crux of the bidding had been, who would outsmart whom. “In some of the rounds, the bidding was on the amount of work committed. Here we saw players committing to connect 45,000 households when there were just 40,000 households in the region. So players committed to doing more work than possible just to win the bids,” he said.

“Then we called bids on the basis of tariffs and people started putting tariffs as low as one paise, which was not feasible either. In the same bidding rounds, in case of a tie, there was a bid bound submitted where larger players committed as much as ₹2,000 crore to win the contract and drive out the smaller players.”

According to the minutes of the meeting held on the alternative model of bidding criteria for CGD network in August last year, “The main criticism in the previous bidding rounds was arising out of bid evaluation parameters. Evaluation parameters should be linked to business model of CGD unlike the previous bidding round.”

So the current bid parameters are more result-oriented. Sarraf said: “The proposed bid parameters are centred on the amount of work that will be committed and the tariff charged beyond the exclusivity period. Work has been divided into number of connections that will be given, the length of pipelines that have been laid and the number of CNG stations that will be set up.”

Published on January 25, 2018

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