The first round of bidding for the city gas distribution (CGD) project has ended recently and downstream regulator Petroleum and Natural Gas Regulatory Board is in the process of inviting bids for more cities. L Mansingh, the Board chairman, speaks to Ajay Modi about the challenges and opportunities in the CGD business. Excerpts:
Only eight players have bid for the CGD network in six cities. Is the low interest an impact of the slowdown?
The response is more than one could have expected. This is a situation of economic slowdown and one cannot expect participation from many players.
There was no participation from foreign players in the first round. Do you expect such players to bid in the near future?
It is difficult for foreign companies to raise money for investments in the current economic downturn. However, as things improve, I am sure there would be significant foreign participation.
CGD infrastructure involves huge investments. PNGRB had made a recommendation for a 10-year tax holiday for such infrastructure. What is the status?
The Income Tax Act provides for a tax holiday to a cross-country transmission and distribution pipeline. However, it does not specifically mention the CGD network. We have requested the finance ministry to include CGD as well. A decision is awaited.
As more and more cities come under CGD, the demand for manpower, particularly semi-skilled professionals to execute the project, would grow. How will this demand be met?
We have been in talks with various state governments asking them to adopt a PPP model for their industrial training institutes. A CGD company can partner with few such institutes and help in training workers and later absorb them. States like Tamil Nadu have shown interest in the proposal.
Will the benefit of a CGD network be limited to cities?
Certainly not. The moment a pipeline reaches a city, the villages, towns and industrial units that fall on its both sides will get connected. This will ensure clean and regular supply to domestic users and to the commercial buyers. It has happened in Gujarat and it will happen elsewhere too. This is going to be a major development in the country in the next few years.
How many cities are expected to have CGD networks by 2010?
In the next two years, at least 40-45 cities should be covered in addition to the existing ones like Delhi and Ahmedabad.
