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New Delhi: The business environment for City Gas Distribution (CGD) companies in India is at its best currently with the government and the regulator pushing for creation of supporting infrastructure and market reforms, D K Sarraf, Chairperson of downstream Oil & Gas regulator Petroleum & Natural Gas Regulatory Board (PNGRB) has said.
“The business has full support of the government and the regulator. Despite the challenges in creation of infrastructure and its heavy upfront cost, there cannot perhaps be a better business environment for gas projects than the present time,” he said, speaking at the ETEnergyworld Virtual Summit on City Gas Distribution.
The event — Virtual Summit on City Gas Distribution: Developing the Infrastructure for a Gas-based Economy — is a digital initiative of ETEnergyworld with GAIL (India), ABB, LocusView, Bynry and Federation of Indian Petroleum Industry (FIPI) as partners.
Delivering his address as Chief Guest at the event, Sarraf pointed out that CGD companies are in a unique business as natural gas is available at subsidized prices for domestic Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) and there is marketing exclusivity, no competition for some years.
“Courts are also passing orders directing industries using polluting fuel to switch to natural gas, that is, support of the judiciary and the green tribunals. Gas prices in the international market and LNG prices delivered to India are lower than the competing fuels. There is a significant tax arbitrage, that is, total taxation on gas is lower as compared to petrol and diesel,” he said.
The number of authorized Geographical Areas (GAs) for CGD has grown from 34 in 2014 to 230 now, with 71 per cent of the population covered under the CGD net currently as compared to 9 per cent six years back. In the same period, domestic PNG connections have grown from 24 lakh to 66 lakh while the number of CNG stations has grown from 810 to 2,300.
Sarraf said this growth is expected to continue as PNG connections would increase from the current 66 lakh to 5 crore in the next six years. “And the number of CNG stations would increase from the current 2,300 to more than 10,000 in the same period, thanks to the commitment of the CGD entrepreneurs during the ninth and the tenth CGD bidding rounds,” he said.
Sarraf’s Chief Guest address was followed by a guest address by E S Ranganathan, Director (Marketing), GAIL and a panel discussion on CGD Infrastructure Development. The discussion witnessed participation from Ravi Agarwal, Executive Director (Marketing), GAIL; Ranjan Dwivedi, Managing Director, Central UP Gas Ltd; Sandeep Trehan, Founder & President at THINK Gas; G Balaji, Head of Energy Industries at ABB; Arun Mishra, CEO, HPOIL Gas and Nikhil Moghe, Partner, KPMG.
The later half of the event included two presentations by ABB India and Nomura Research Institute covering the technology aspects of the CGD projects, a fireside chat with Shahar Levi, Co-founder and CEO of LocusView and a panel discussion titled “Leveraging Technology to Ramp up Regional CGD market Expansion”.