IOC to enter CNG retail market in Gujarat

Oil majors move irks existing players

The state-run oil major Indian Oil Corporation Ltd (IOC) eyes to enter the Compressed Natural Gas (CNG) retail market in major cities in Gujarat.

However, the move has created a flutter among the existing players as it is seen as an infringement of the existing state government guidelines.

As per the guidelines more than one entity would be issued licence for distribution of CNG in one city/town. Already licences have been issues to private and public companies in all major cities including Ahmedabad and Vadodara.

"In IOC we are fully prepared for selling CNG and to start with Ahmedabad where a large number of IOC's retail outlets (ROs) will be having CNG dispensing facilities for vehicles playing on the road. We understand that state government has already issued licence to a private company to sell CNG and Piped Natural Gas (PNG) in Ahmedabad and it is believed that so far the state government guidelines do not allow more than one player in this segment. But if we are also given licence or any changes made in the present norms, IOC can extend its CNG facilities within no time," R Sareen, general manager of the PSU told Business Standard here on Monday.

It may be said here that the Ahmedabad-based multi-diversified Adani Group has been given the rights to sell CNG and PNG in two major cities of Gujarat, Ahmedabad and Vadodara and at present Gujarat Adani Energy Ltd (GAEL), the Group's new entity is working on setting up its CNG and PNG distribution network in both the cities and there is all possibility that entry of a second player in this segment, would irk Adanis.

Sanjay Gupta, chief executive officer (CEO) of Adani Group, reacting sharply to the development said, "There is no much space for a second or third player in any of the cities or towns in Gujarat for CNG/PNG sales and it would be a commercially feasible proposition for any of the players operating from one city or town. In Ahmedabad city, we are planning to put up around 12 CNG stations to cater to the needs of vehicles and our study reveals that this much of distribution setups will suffice the need and we do not find any reason of another player attempting to make its entry."

Even other players such as Gail India Ltd and Bharat Petroleum Corporation Ltd (BPCL), which are already licenced by Gujarat State Petroleum Corporation Ltd (GSPCL), nodal agency for petroleum sector for the state government, for the CNG and PNG distribution in other cities, may also put an objection on IOCL's plan to foray into CNG retail sales.

A source close to BPCL, which has been given rights to setup CNG/PNG distribution network in Gandhinagar and Himmatnagar of Sabarkantha district, said, "We have an agreement signed with GoG and GSPCL which though clearly not saying that more than one player would not be allowed but the Government had assured that the interest of the entities which would be spending huge on putting infrastructure for CNG distribution, would be protected. Even senior officials of GSPCL do not believe that there is space for too many players in one city or town."

Sareen denying to divulge further plan of IOCL in CNG distribution, said, "Issuing coming in between our plan to make foray into CNG sales, would be handled and we are presently working out the modalities." Chairman of GSPCL, C K Koshy could not be reached for his comments, while its Managing Director, D J Pandian, also was not available for his comments on the development.

Minister of State for Energy, Petrochemicals, Saurabh Dalal also could not be contacted.

SC diktat

Only a few months back Supreme Court had commented that oil and petroleum sector should be brought under jurisdication of the Centre and state government have no power to control petroleum, gas and oil policies.

This put a complete halt on state government's plan to come out with a CNG Act, which was due to be tabled during the summer session of the Assembly following state government's announcement in January, this year.