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Adani Gas wins 11 more bids for City Gas Distribution

Adani Gas emerged winner of the city gas distribution (CGD) results announced on Friday. Following it were Bharat Petroleum Corp Limited (BPCL) and Torrent Gas Private Limited.

Adani Gas won a total of 22 bids (11 on August 3, 2018 ) for CDG. It won rights to retail CNG to automobiles and piped cooking gas to households and industries in 13 cities on its own. A further 9 cities in a joint venture with Indian Oil Corp (IOC). According to the results of the 78/86 cities that were bid out, IOC bagged 7 cities on its own. This includes Coimbatore and Salem in Tamil Nadu and Guna in Madhya Pradesh.

Bharat Gas Resources Ltd, a unit of BPCL won 11 cities while Torrent Gas won bids to 9 cities. GAIL Gas won bids for 4 cities and Indraprastha Gas Ltd won gas rights for Meerut and Muzaffarnagar in Uttar Pradesh.

‘As per the commitment made by the various entities in the 78 Geographical Areas (GAs) approved for issuance of Letter of Intent (LoI) in 9th CGD Bidding Round, ₹ 1.53 crore domestic piped natural gas connections and 3,627 CNG (compressed natural gas) stations for transport sector would be installed largely during a period of 8 years up to September 30, 2026,’ PNGRB said.

On August 16, the results of 7 GAs will be announced. A total of 19 companies have been allotted areas. Of these 3 are new entrants to CGD business.

CRISIL Ratings

CRISIL- rated companies control half of the GAs previously allotted and their credit profiles remain healthy. Sales volumes are at 8% annual growth, leverage at less than 0.8x and a healthy operating profitability margin at ~24%.

PM’s 2020 target

The bidding was intended to boost PM Narendra Modi’s target of giving piped cooking gas connection for 1 cr households by 2020.  According to the PNGRB, this is likely to attract 70,000 cr investments. And the government plans to raise the share of natural gas in the primary energy basket from 6.5% to 15% in the upcoming years.

The results for the remaining 7 GA was to be announced on August 16 and are being awaited.

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