Adani Gas Ltd on Wednesday announced the acquisition of city gas licenses for Ludhiana, Jalandhar and Kutch (East) from Jay Madhok Energy for an undisclosed sum of money.
Jay Madhok Energy Pvt Ltd has been showcased by the oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) over defaulting on timelines and alleged irregularities in the acquisition of the city gas license.
“Adani Gas Ltd has signed a definitive agreement for acquisition of three Geographical Areas namely Ludhiana, Jalandhar and Kutch (East),” the firm said in a statement.
It, however, neither disclosed the name of the city gas license holder for the three cities nor the acquisition price.
“All 3 GAs have high volumes potential in terms of demand of over 6.5 million standard cubic meters per day over a period of 10 years. These geographical areas’ (GA’s) are under Phase 1 of Bharat Mala Pariyojana by NHAI which will further boost the development and volume growth,” it said.
Jay Madhok had in 2013 won the license to retail CNG to automobiles and piped natural gas to households and industries in Jalandhar in Punjab and two years later it got a license for Ludhiana in the state and Kutch (East) in Gujarat.
The three cities were bid out in the third city gas licensing round where the bidder offering to lay the longest length of gas pipeline and provide the most cooking gas connections got the license.
But the firm, according to PNGRB, made little progress on its commitments. PNGRB in 2016 cancelled its licenses. Jay Madhok challenged the cancellation in Appellate Tribunal, which in April 2017 set aside the PNGRB order and asked the regulator to follow the set procedure for cancellation.
Since then the matter is pending before PNGRB and Jay Madhok had been seeking adjournments on one pretext or the other.
In March 2019, PNGRB issued another notice to Jay Madhok over alleged irregularities in the net worth used to acquire the license. It also alleged fraud in the furnishing of a loan sanction letter from Deutsche Bank AG, Singapore.
Sources said PNGRB will now have to examine if a sale of the license is permissible under the statute and what happens to the default by the original licensor.
PNGRB can accord an approval if it concludes that such a deal is in the best interest of the development of the license.
With the acquisition, Adani Gas now has a license for 22 GAs. It has another 19 licenses in a joint venture with state-owned Indian Oil Corp (IOC). These GAs cover 74 districts.
“Ludhiana and Jalandhar are twin cities of Punjab and are major industrial and commercial hubs with very high-volume potential of CNG and piped natural gas (PNG) homes. Both cities are in the vicinity of the pipeline connectivity,” the company statement said.
Kutch (East) in Gujarat is poised to take centre stage for the industrial development in Gujarat.
“AGL has strong presence in Gujarat,” it said, adding Kutch (East) is well connected with pipeline and LNG terminal infrastructures making it an attractive destination for the development of CGD network.
Given the availability of pipeline connectivity in the surroundings, all the 3 GAs will offer early monetisation opportunity to AGL.
“The transaction is subject to necessary regulatory and other customary approvals,” the statement said.
(PTI)
