Faridabad City Gas Distribution Project

Active

Prospective

Adani Energy Limited in a joint venture with Indian Oil Corporation is setting up a 20 KM City Gas Distribution project in the city of Faridabad in Haryana. A “No-Objection-Certificate” to build the project was given by Haryana State government to Adani for Faridabad city in January 2008. The project was to be implemented on Build-Own-Operate (BOO) basis and has a project life of 25 years. However, due to the establishment of Midstream and downstream petroleum and natural gas regulator the project was stalled due to the Petroleum and Natural Gas Board (PNGRB) Regulation which made the state no-objection certificate null and void and asked the project proponents to apply for authorization of the project with it under the section 18 of the “Regulation of Lay, Build, Operate local or City Gas Distribution Networks” in 2008. It must also be noted that a Supreme Court of India judgment in March 2004 was unequivocal in declaring that only the Union government had the authority to legislate on natural gas including liquefied natural gas. The states, said the bench, had no competence to legislate on this natural resource Adani Energy Limited filed a case against Union of India before Supreme Court of India (WP No. 13029 dated January 15, 2008) for connectivity of natural gas at Faridabad and Noida. The Supreme Court has passed an interim order in favour of the company for connectivity at Faridabad on April 4, 2008. Further, Supreme Court has passed an order on January 9, 2009 directing to commence gas to the Adani Energy Limited immediately for Faridabad. According to sources in Adani group, the company was expected to start operations at Faridabad shortly based on a recent court verdict in its favour. The claim, however, could not be verified. Simultaneously, Adani had applied for authorization of the project with PNGRB in August 2008. However, the project was not cleared by the regulator till 31st December 2008. The project achieved financial closure in September of 2008 with a US$ 39.11 million loan that was arranged by Indian Development Financial Corporation (IDFC) to finance the construction of a distribution network. The project was to cost US$ 55.78 million with a debt to equity ratio of 70:30.

Energy

India

High

World Bank Group

Project

Commercial, Natural Gas, Government, Oil and Gas