GAIL, BPCL, HPCL offers for city gas licences raise eyebrows
By siliconindia | Thursday, 06 January 2022, 03:36 Hrs
GAIL, BPCL and HPCL are competing for licences in 19 city gas distribution areas - nearly a third of 61 being contested in the latest bidding round - with the firms they control, drawing allegations of unfair practice.
For instance, the licence area comprising Baloda Bazar, Gariyaband and Raipur districts in Chhattisgarh has received 16 bids, of which six are from firms - GAIL Gas, BPCL, HPCL, Indraprastha Gas (IGL), Mahanagar Gas (MGL) and Aavantika Gas - sharing a complex web of relationship. Gail Gas is a fully owned subsidiary of GAIL (India). GAIL (India) is also the promoter of MGL. Gail (India) and BPCL jointly control IGL, while Gail (India) and HPCL jointly control Aavantika Gas. Similarly, of the 15 bids received for Nagpur, four are from Gail Gas, MGL, Maharashtra Natural Gas (MNGL) and BPCL. MNGL is a GAIL-BPCL joint venture.
BPCL is competing for licences with its related entities in 15 areas while Gail Gas is in a contest in 11 and HPCL in three.
IGL and Central UP Gas, the two BPCL-GAIL JVs, are competing for two city gas areas in UP. BPCL, GAIL, HPCL and Petroleum & Natural Gas Regulatory Board didn't respond to ET's request for comment. However, a source close to PNGRB said all these firms were ultimately owned by the government and run by independent boards, leaving no scope for any unfair practice.
An executive at a large city gas firm, however, rejected PNGRB's defence, saying the auction process has been vitiated, as the group with more than one bid for a licence has a bigger chance to win. "It's unfair to other bidders - public or private," he said. Private players like Adani, Think Gas and Torrent Gas are some of the big bidders in the current round.
An addendum to the tender issued by PNGRB on November 18 says: "In case an entity forms more than one JV/consortium, for example, X forms JV/consortium with Y (consortium C-1), and X forms another JV/consortium with Z (consortium C-2), then consortium C-1 & C-2 are not allowed to bid for the same GA".
The source close to PNGRB said the addendum doesn't apply to established JVs but must be seen in the context of new consortiums formed to comply with the net worth criteria and to avoid any manipulation.