Days after the Union Cabinet approved standardised norms for price auction of natural gas, the Directorate General of Hydrocarbons (DGH) on Monday invited offers for the empanelment of agencies for independently carrying out bidding on an e-platform. In a 17-page notice, DGH said a gas seller has to engage any one of the empanelled agencies for the sale.
The government has since 2017 given pricing freedom for natural gas production from all fields other than the ones given to state-owned ONGC and Oil India Ltd on a nomination basis. Firms such as the Reliance Industries-BP combine as well as ONGC (for non-nomination blocks) have been auctioning gas to users. They would typically devise a formula and seek bids from users.
They will continue to devise a pricing formula but will now have to seek bids on the electronic-platform of the empanelled agency of DGH. "All the requisite technical and contractual information related to the process for discovery of market price of natural gas shall be provided by the seller," DGH said.
The agency shall be required to independently carry out e-auction through its e-auction platform or electronic bidding portal as per the specifics of the sale process and in accordance with the guidelines for e-auction. DGH said the agency shall design, structure and implement the overall process of e-auction for the discovery of market price for natural gas produced in India while ensuring a transparent, fair and competitive process.
"The agency shall develop an optimum e-auction plan in consultation with the seller while ensuring adequate safeguards against the potential distortion of competition and transparency while taking into account the competition characteristics," it said. Details such as salient features of a gas sales agreement, production profile, firm quantity on offer, take or pay obligations, composition of natural gas, and pre-qualification criteria for bidders would have to be published by the agency.
Also, payment terms, penalties for default on either side, bank guarantees and delivery schedules have to be detailed, DGH said. After e-auction, the natural gas volumes will have to be allocated based on pre-defined criteria and mechanism.
DGH said the agency should have a minimum turnover of Rs 200 crore in the past three years. They should also have five years of experience in conducting e-auctions for commodities like coal, oil and gas, minerals, ores, and machinery, and/or rights/licences like spectrum, or other concession rights and advertising rights, it added. Last week, the Union Cabinet allowed marketing freedom for blocks where pricing freedom already existed. Alongside, it approved standardised bidding for price discovery.
DGH, as per the Cabinet decision, was asked to formulate guidelines for the same.
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