PNGRB source says Adani Gas deal to buy 3 city gas permits invalid

PNGRB source says Adani Gas deal to buy 3 city gas permits invalid

–PNGRB orders scrapping of Ludhiana, Kutch (East) city gas licences

–PNGRB orders transfer of Jalandhar city gas licence to another co

–PNGRB order on 3 city gas licences of Jay Madhok Energy

–Adani Gas was to buy Jay Madhok Energy’s 3 city gas permits

–PNGRB source: To auction Ludhiana, Kutch (East) city gas permits

By Sukalp Sharma and Sunil Raghu

NEW DELHI – Adani Gas Ltd’s deal to acquire Jay Madhok Energy Pvt Ltd’s city gas licences for three geographical areas has been rendered invalid, at least in its current form, as the Petroleum and Natural Gas Regulatory Board today cancelled licences for two areas and transferred the permit for one to another company, a senior official with the regulator told Cogencis.

On Nov 4, Adani Gas announced the signing of definitive agreements to acquire city gas permits for Kutch (East) in Gujarat and Ludhiana and Jalandhar in Punjab. The deal was announced even as Jay Madhok Energy had been served notices over defaulting on project timelines and alleged irregularities, including submission of doctored bank documents, in getting the licences, and the matter was being heard by the PNGRB.

The regulator today ordered cancellation of licences for Kutch (East) and Ludhiana, and transfer of the licence for Jalandhar to Ishar Gas Jalandhar Pvt Ltd, which is also a part of the Jay Madhok group.

“As far as the Adani Gas deal is concerned, it cannot go ahead now as two of the three licences have been cancelled and will only be offered in future CGD (city gas distribution) auction rounds. If they (Adani Gas) are interested in those two GAs (geographical areas), they will have to bid in the auction,” said the PNGRB official, who did not wish to be named.

For Jalandhar, however, the PNGRB official said that Adani Gas can still acquire the licence from Ishar Gas Jalandhar, which would require the deal to be reworked and filing of fresh applications with the PNGRB. The official added that following today’s order, the regulator will not be considering Adani Gas’s pending application on acquisition of the three city gas licences.

Despite repeated attempts, Adani Gas did not respond to Cogencis queries on the PNGRB order. Adani Gas and Jay Madhok Energy have the option of moving the Appellate Tribunal for Electricity, or APTEL, against the PNGRB order, after which they can also seek relief from courts.

 

While announcing the deal last month, Adani Gas said that the three geographical areas have demand potential of more than 6.5 mscmd over a period of 10 years. The addition of these three areas would have resulted in Adani Gas becoming the city gas distributor in 22 geographical areas, apart from 19 areas where its joint venture with Indian Oil Corp Ltd sells compressed natural gas and piped gas.

The licences had been cancelled once in 2016 as well, but the appellate tribunal set aside that order in 2017, asking the regulator to follow the established procedure for licence cancellation. In addition to earlier notices, the regulator in March 2019 sent more notices to Jay Madhok Energy for allegedly furnishing doctored financial and bank documents.

Jay Madhok Energy had won the licence for Jalandhar in 2013 and for Ludhiana and Kutch (East) in 2015.

Apart from cancelling the licenses for Ludhiana and Kutch (East), the PNGRB today also ordered immediate encashment of performance bank guarantees for the two geographical areas.

The regulator also ordered “to levy a penalty…equivalent to 50% of PBG (performance bank guarantee) amount and immediate encashment of the performance bank guarantee to that extent…for Jalandhar GA”.

Today, shares of Adani Gas ended at 364.05 rupees on the National Stock Exchange, 2.7% lower from the previous close.  End

https://www.cogencis.com/newssection/pngrb-source-says-adani-gas-deal-to-buy-3-city-gas-permits-invalid/

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