HPCL bags city CNG supply licence

Adanis delay in setting up the network seen as trigger

The Gujarat government has issued a licence to Hindustan Petroleum Corporation Ltd (HPCL) to set up a compressed natural gas (CNG) network in Ahmedabad despite its earlier assurance to the only supplier in the city, Gujarat Adani Energy Ltd (GAEL), that no other player will be entertained in the segment. GAEL had bagged the CNG distribution mandate a year back.

State government sources said the entry of the second player is because of delays on the part of GAEL in setting up the distribution network.

Minister of state for energy and petrochemicals, Saurabh Dalal, said, "We have issued a licence to HPCL for setting up a CNG network in the city. HPCL has agreed to set up nine CNG daughter stations and one mother station by March 2005.

The government has been trying to convert most of the public transport buses to be CNG-powered and we need to ensure an extensive CNG retail network for this. The participation of two major players "" HPCL and the Adanis "" will take care of this."

The decision taken by state energy and petrochemicals department is not expected to be appreciated by the Adanis, the promoters of GAEL, which has already put up three CNG stations in the city.

HPCL already holds the licences for laying CNG and piped natural gas (PNG) distribution network in Mehsana and Gandhinagar.

According to a HPCL source, this project is yet to take momentum for lack of pipeline connecting the cities with the gas station in the outskirts of Ahmedabad.

"With gas already been reached to Ahmedabad, HPCL would be able to put up a CNG network faster where it also has an extensive network of petroleum retail outlets. These outlets could be utilised to put up CNG dispensers for reaching to private vehicle owners in the city," said the source.

Saurabh Dalal, talking to Business Standard on Monday, said even other petroleum majors like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Indo-Burma Petroleum (IBP) have been asked by the state government to install CNG dispensers along with their retail petroleum outlets in Ahmedabad.

"We want easy access of CNG for non-public vehicles in Ahmedabad and that is why we have allowed IOC, BPCL and IBP to put up CNG dispensers within their petrol pumps. However, only GAEL and HPCL would be the license holders for the distribution network," said Dalal.

Sanjay Gupta, chief executive officer (CEO) of the Adani Group, said: "We have to abide by the government plan and decision, though multiple players in one city would not really be economically feasible for any of the firms."

While Gupta sounded remorse with the development and denied to comment further, a source close to Adanis said, "Earlier the government had verbally assured that it would not license multiple players in one city or circle as it would not be really technically or economically feasible, but this development is definitely not going to encourage private investors."

GAEL is also a licence holder for CNG and PNG distribution in Vadodara, while it has signed a gas purchase agreement with the Gujarat State Petroleum Corporation Ltd, which buys liquefied natural gas from Petronet LNG Ltd and its stakeholders including GAIL India.

GAEL is a part of the Rs 14,000 crore Adani group which has its flagship company, Gujarat Adani Exports (GAEL), and also runs India's first private port, Mundra Port, in Kutch district of Gujarat. Adanis are also into development of a special economic zone in Kutch, close to its port site.