New Delhi: Centre’s time extension grant to City Gas Distribution (CGD) players for setting up projects will provide only a temporary breather to these companies, rating agency ICRA has said.
Notably, the order was given in the hindsight of delays that occurred due to Covid-19 necessitated lockdown.
Earlier this month, the Petroleum and Natural Gas Regulatory Board (PNGRB) gave a limited time period extension to 41 CGD players setting up projects in 185 ‘Geographical Areas’ (GAs) so as to complete their network rollout commitment.
A large number of these 185 GAs had received authorization in the ‘Bid Rounds 9 and 10’.
The time granted varies from 129 days to 251 days across different GAs depending on the duration of the Covid-19 lockdown.
“The industry expected a higher extension period – as high as 2 years in some cases since the operational difficulties in terms of availability of labour and equipment continued even after the discontinuation of lockdowns,” said Ankit Patel, Vice-President and Co-Head, Corporate Ratings, ICRA.
However, a majority of the 185 entities have received the basic extension of 129 days only, whereas only 38 have received extensions ranging from 136-251 days.
According to ICRA, the difficulties for CGD players associated with re-mobilisation and availability of equipment, labour and other resources to resume project execution are covered under the relief provided as restoration period.
The PNGRB has considered 69 days as the centrally imposed lockdown period and 60 days as the restoration period.
Under the present CGD regulations of PNGRB, CGD players have MWP (Minimum Work Programme) obligations for each year in terms of the length of pipelines, a number of CNG stations and the number of domestic connections to be completed during each of their initial years after receiving exclusive authorisation to market gas in each specified area.
In addition, delay in execution of projects under the CGD regulations can lead to the imposition of penalties.
