Adani Gas secures 3 city gas licences from firm show-caused by PNGRB for alleged irregularities

• PNGRB cancelled the licences given to Jay Madhok Energy in 2016, saying that the progress made on the projects was not in accordance with the commitments

• Another notice was issued to Jay Madhok Energy in March 2019 by PNGRB over alleged irregularities in net worth which was used to acquire the city gas licences

Ahmedabad: Adani Gas Ltd has signed a definitive agreement with Jay Madhok Energy for an undisclosed amount for the acquisition of city gas licences for three geographical areas — Ludhiana, Jalandhar and Kutch (East). All the three GAs have high volumes potential in terms of demand of over 6.5 MMSCMD over a period 10 years. However, the acquisition will have more hurdles to cross before it is finalised as Jay Madhok Energy was show-caused by oil and gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) over defaulting of timelines and alleged irregularities in securing the city gas licences.

In an official statement released on Wednesday, Adani Gas said, "These GAs are under Phase 1 of Bharat Mala Pariyojana by NHAI which will further boost the development and volume growth."

Jay Madhok Energy's city gas licence under PNGRB radar

In 2013, Jay Madhok Energy won the city gas licence for retailing CNG to vehicles and piped natural gas to households and industries in Punjab's Jalandhar. Two years later, the company secured licences for Ludhiana in Punjab and Kutch (East) in Gujarat. However, PNGRB cancelled the licence in 2016, saying that the progress made on the projects was not in accordance with the commitments. The license secured by the company was given away in the third round of CGD bidding, under which bidders who committed to lay the longest length of gas pipeline and provide the most number of cooking gas connections were given licence.

The cancellation was challenged by Jay Madhok Energy in the Appellate Tribunal, which set aside the PNGRB order in 2017 and asked the regulator to follow the procedure for cancellation. The matter has since then been pending before PNGRB. 

Another notice was issued to Jay Madhok Energy in March 2019 by PNGRB over alleged irregularities in net worth which was used to acquire the city gas licence. The regulator had alleged fraud in the furnishing of a loan sanction letter from Deutsche Bank. Therefore, the sale of the licence to Adani Gas will now have to be scrutinised by PNGRB. The statement released by Adani Gas also mentioned, "The transaction is subject to necessary regulatory and other customary approvals."

AGL shall now have a presence in 22 GAs as a standalone entity

With the addition of these 3 GAs, AGL shall now have a presence in 22 GAs as a standalone entity and additional 19 Gas with JV partner with IOCL aggregating its tally to 41 Gas (74 Districts) ensuring AGL's continued leadership in CGD Business in India, said the statement.

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Suresh P Manglani, CEO, Adani Gas said, "These 3 GAs offer high PNG and CNG volumes together with excellent infrastructure growth opportunities.  Adani Gas tally of GAs shall now increase to 22 GAs. This transformational acquisition shall allow AGL to supply cleaner fuels – PNG in fulfilling much awaited aspirations of large number of homes, Commercial and Industrial consumers, Gurudwara, hotels, restaurants and environmental friendly CNG to automotive consumers in Ludhiana, Jalandhar and Kutch (East) GAs. This initiative by AGL shall further support the vision of central and state governments to provide PNG and CNG to all."

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