Eight companies are in the fray for rolling out gas networks in six cities, bids for which were invited by the Petroleum and Natural Gas Regulatory Board. The deadline for submission of the bids expired on Tuesday.

PNGRB had invited technical bids for six cities - Devas (Madhya Pradesh), Kakinada (Andhra Pradesh), Kota (Rajasthan), Mathura (Uttar Pradesh), Meerut (Uttar Pradesh) and Sonepat (Haryana). Those who qualify will be asked to submit a financial bid in the next 10 days. It typically takes Rs 400 crore (Rs 4 billion) to roll out gas distribution network in a city.

The board says it has received bids from eight companies - Gail Gas, GSPC Gas Company, Reliance [Get Quote] Gas, Bhagyanagar Gas, Bharat Petroleum Corporation [Get Quote], Indraprastha Gas [Get Quote], DSM Infratech and Indian Oil Corporation [Get Quote], which has formed a joint venture with Adani Energy to bid for city gas distribution.

While most of the participants are experienced players, PNGRB says the only new player is DSM Infratech.

A senior official from PNGRB termed the response "satisfactory", given the ongoing economic downturn.

While GAIL Gas, GSPC Gas and the IOC-Adani Energy JV have bid for Devas, Reliance Gas and Bhagyanagar Gas have bid for Kakinada. GAIL Gas and IOC-Adani Energy have both bid for Kota and Meerut. BPCL and Indraprastha Gas have also bid for these cities. Sonepat has received the maximum number of bids - five, including from DSM Infratech.

Mathura, on the other hand, has received only one bid - from GAIL Gas. "According to regulations, we can extend the timeline by a month for cities where we have not received sufficient number of bids. We plan to do that for Mathura," the senior official said.

Under the gas utilisation policy, the government gives priority to critical sectors like fertilisers and power for supply of gas. Gas for city networks has a lower priority.

PNGRB has been concerned about supply of gas for city gas distribution. It also wrote to the Ministry of Petroleum and Natural Gas to ensure 5 million standard cubic metres per day gas for city gas distribution every year.

The company that wins the final bid will have to secure a firm tie-up for gas supply within three months. PNGRB has requested the government to lay down guidelines for allocation of gas in such a manner that it is available to the successful bidder within a year.

In the next phase, the PNGRB plans to cover 14 cities, bidding for which will commence as soon as the initial process for the first six cities is over.

Analysts say that CGD sector in India currently consumes 5-6 per cent of the total available gas, or 5-6 million standard cubic metre per day, but the consumption is set to quadruple in a few years.

The PNGRB expects the city gas distribution network to spread to 100 cities by the end of the Eleventh Five-Year Plan (2012). Currently, around 10 cities have piped gas networks for domestic use.