Oil regulator PNGRB has rejected Adani Gas Ltd's application for authorisation to retail CNG to automobiles and piped natural gas to households in Jaipur and Udaipur, saying the company was not in compliance with regulations for a licence.
In a 23-page order, the Petroleum and Natural Gas Board (PNGRB) on February 28 gave detailed reasons for rejecting Adani Gas Ltd's (AGL) claim of having 'deemed authorisation' to operate a city gas distribution (CGD) network in the two cities before the regulator came into existence.
"Based on the analysis and deliberations of the Board after hearing and considering the submissions of AGL and keeping in mind the observations/directions of the Supreme Court of India, the application of AGL for Jaipur and Udaipur cities for CGD authorisation is herby rejected," it said.
Adani Gas had, in response to a November 2005 invitation of Rajasthan government, bid for setting up the city gas distribution (CGD) network in Udaipur and Jaipur.
The state government on March 20, 2006 gave a no objection certificate, subject to certain conditions, to the company for retailing CNG and piped natural gas in Udaipur and Jaipur. Adani Gas in the same month deposited the commitment fee of Rs 2 crore.
Subsequent to this, the central government in October 2007 appointed PNGRB as the regulator for the sector. Soon after, PNGRB sought application from companies operating CGD networks before its appointment as the regulator.
PNGRB on March 31, 2008 issued a notice to Adani Gas stating "it did not have the requisite authorisation from the central government," the order said, adding the company submitted separate applications for authorisation for Jaipur and Udaipur to the regulator on August 28, 2008.
On May 18, 2011, the Rajasthan government withdrew the NOC given to Adani Gas. Subsequently on May 19, 2011, PNGRB rejected Adani Gas' application for both the cities.
The company challenged the decision of PNGRB before Rajasthan High Court which dismissed its petition. It then filed an appeal before the Supreme Court.
"Supreme Court vide order dated January 29, 2019 quashed the order dated May 19, 2011 passed by the Board and directed the Board to take a fresh decision in the matter within four weeks," the order said.
In compliance with the Supreme Court order, PNGRB held personal hearing with Adani Gas representatives.
The company contended that "it was entitled to be granted authorisation by the Board in view of the provision of 'deemed authorisation' as contained in Section 16 of the (PNGRB) Act" for entities operating before the regulator came into existence.
In its order, PNGRB said Adani Gas meets the minimum eligibility criteria but did not comply with the requirement of making committed investments and physical progress in rollout of CGD network in both the cities. Also, it had not tied up gas for supply through the CGD networks.
"The conclusion of the Board is that Adani Gas is in non-compliance with a substantial part of the criteria," it said.
On the company's claim of having made substantial investment in the two cities, PNGRB said "no documentary evidence has been presented by Adani Gas to show the mammoth expenditure it has supposedly incurred on the project."