Supply, Distribution and Marketing of Natural Gas including CNG and PNG by IGL (Including Pricing)

 

IGL was established on 23 December 1998 as a joint venture of GAIL (India) Ltd, BPCL and Govt. of NCT of Delhi to implement the city gas distribution project in the NCT of Delhi. In order to promote the usage of CNG in the NCT of Delhi, Government increased allocation of Natural Gas from 0.48 MMSCMD (July 1995) to 0.98 MMSCMD (December 2001) and further to 2.0 MMSCMD (June 2002).

Numbers of various categories of CNG stations set up by IGL in National Capital Region as on 28.02.2007 are as under:

In NCT of Delhi

Company Mother Online  Daughter Booster Daughter  Total Stations
IGL (Own) 65 14 5 0 84
At BPCL outlet 0 9 15 0 24
At HPCL outlet 0 5 6 1 12
At IOCL outlet 0 9 6 2 17
At IBP outlet 0 5 3 0 8
Total (A) 65 42 35 3 145

Delhi - Pipeline System

In Noida

Daughter Booster Station at HPCL outlet - 1 no. 

Total Number of CNG Stations - 146 Nos.

As on date there are no set norms/guidelines available w.r.t minimum and maximum distances between 2 filling stations. However-, selection of any CNG filling station mainly depends on the potential load/traffic flow in a given area and therefore is independent of any minimum/maximum distance criteria. While selecting any new site, it is usually ensured that it increases eases the geographical spread of CNG distribution network.

IGL endeavors to provide a comfortable refueling to al customers at the CNG stations. Though actual refueling time varies from 2 to 3 minutes per vehicle at the dispenser point, waiting time ranges from nil to 10 minutes depending upon the type of vehicle viz Auto, Car, RTV, Bus etc and a so on non peak hours/peak hours.

Pricing of CNG:

The Retail Selling Price of CNG in Delhi is based on the following parameters:

Based on the above parameters the RSP of CNG in Delhi is Re. 19.20/-per kg, which is the lowest in India.

The break up of selling price of CNG in Delhi is as under

Basis Price Rs.16.49 per kg.
Excise @ 16% Rs.2.64 per kg.
Education Cess on Excise @ 3% Rs.0.07 per kg.
Selling Price Rs.19.20 per kg.

There is no Sales Tax/Vat applicable on CNG in Delhi.

Growth in Compression Capacity

Piped Natural Gas (PNG)

The piped natural gas project was taken over by IGL in Dec. 1998. From 1500 domestic consumers, 8 small commercial and 3 large commercial consumers in March 99 the consumer base has grown to 70819 domestic PNG connections, 257 small commercial consumers and 46 large commercial consumers as on Marc 31 , 2007. Presently, PNG supply is available in 57 nos. of colonies of NCT of Delhi. Though, we are having 70819 PNG connections, the present network is adequate to cater 1.5 lac consumers for which innovatve marketing strategies are being adopted to expand consumer base.

Further, work is in progress in new areas of Paschim Vihar, Vikas Puri, Rohini Sector 18 and CPWD colonies of Andrews Ganj, Sadie Nagar, NW Moti Bagh, South West Moti Bagh, Sriniwaspuri, DIZ Area to spread the network in a big way. IGL has plans to cover subject to technical feasibility all areas of Delhi in phases over next five years.

The economic viability of the project is dependent on the number of households and commercial customers located in the area. Taking into account economic viability and available capital expenditure budget, new areas are added each year. The hurdles being faced in carrying out this job is 1) delay in availability of digging permissions from multiple agencies. Viz. MCD, DDA, NDMC, CPWD, PWD, NHAI, NOIDA, GNIDA, AAI, etc. for which a single window permission provision may be enacted for speedy coverage of Delhi and 2) additional allocation of Natural Gas.

IGL faces difficulty in laying down pipelines owing to multiplicity of agencies from which permissions need to be taken. IGL has been emphasizing the need for dedicated corridors for gas pipelines with all the land owning agencies in different forums. Private builders who approach IGL for PNG supply during planning stage of their projects are offered suitable advice on gas pipeline infrastructure required in their projects.

The parameters on which PNG pricing is based in Delhi are given below:

Pricing for Piped Natural Gas Customers in Delhi:

The PNG consumers of Indraprastha Gas Limited have been categorized as follows

  1. Domestic PNG Consumer -

    The price of PNG is indexed to the administered retail-selling price of domestic LPG (14.2 Kg) cylinder in the National Capital Territory of Delhi, as applicable from time to time, taking into account the respective heating values of Natural Gas & LPG.

    The current price of domestic PNG is Rs. 13,00 per scm + 4 % VAT-

  2. Small Commercial Consumer -

    The delivered price of PNG for small commercial consumer is indexed to 19 Kg commercial LPG cylinder as applicable from time to time in N.C.T. of Delhi after the adjustment for the respective heating values of natural gas and LPG.

    Current Price - Rs.17.79 + 4 % VAT.

  3. Large Commercial Consumer -

    The delivered price of piped natural gas (PNG) ''or a large commercial consumer is indexed to the weighted average price of LDO and LPG (Bulk) as applicable in National Capital Territory of Delhi, from time to time after adjustment for the respective heating values of natural gas, LPG and LDO.

The prices of PNG for large commercial is are as follows -

For consumption upto 2100 scmd - Rs.20.83 + 4 % VAT,

For consumption above 2100 scmd -Rs.12.23 + 4 % VAT.

However with effect from March 15,2007 price slab of Rs.12.23 + 4 % VAT for consumption above 2100 scmd has been withdrawn.

 

 

 

 

 

 
Basic Grid

The 19 bar existing Basic Grid, fed from GAIL's existing network near Delhi makes the supply with the required flow rates possible in various districts of the city through the district regulator stations. 

District Regulator Stations

Each locality has a District Regulator Station (DRS). The 19-KG line terminates at the DRS and the DRS then feeds the gas to the 4-KG network. All the DRSs are equipped with two regulating lines, one stand-by to be used in case the main line needs any repairs. These stations can be isolated in case of any problem by closing the valves located very near to them, both upstream and downstream (on 19 bar and 4 bar networks respectively).

Distribution Networks

The Delhi CGD network is based on the modern gas distribution technology. Such a system is usually supplied with gas from the high-pressure transmission system, through one (or more) city gate stations. From there, after pressure reduction takes place the gas is transmitted through the basic grid, which forms the backbone of the distribution system. The district regulators form the next interface between the steel basic grid and the MDPE distribution network. The distribution pipeline network is installed in the colony lanes of the project area and feeds the service lines. The service line connects the distribution network to the industrial/commercial and domestic consumers through service regulators and gas meters.

The distribution networks of MDPE Pipes originate from the District Regulator Stations. Since the gas pipeline network is intended to transmit gas to the Domestic/Commercial consumers, these networks are operated under a maximum pressure of 4-KG, which is comparable to traditional low-pressure distribution systems. There is also a higher degree of safety as the pressure Regulators of residential customers (which reduce the gas pressure from 4 bar down to the appliances operating pressure [20M bar]) are such that in case of an accidental leakage in the network, gas supply will be automatically stopped.

Future Plans

IGL is presently supplying CNG and PNG to NCT of Delhi.  The compression capacity of IGL will be increased to 18 lakh kg/day from the present 16.48 lakh kg/day. The Company has drawn out plans to consolidate its presence in the city of Delhi by investing Rs. 947 million during the financial year 2005-06 for CNG expansion. The Company has also planned a capital expenditure of Rs. 442 million for PNG expansion in Delhi during the financial year 2005-06 to provide additional PNG connections to over 30,000 domestic households, 75 small commercial and 16 large commercial customers. The oil ministry has allocated 0.7 MMSCMD of natural gas for these three cities. CGD networks will be implemented in phases in the three cities. Under Phase-I, IGL plans to set up about 20 CNG stations in three years time, subject to approvals from concerned State Governments viz. Uttar Pradesh and Haryana.

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Latest News Items. (Click for More)
Regulator seeks direction to CGD cos for disclosure of gas price break-up 4/19/2014 12:00:00 AM
 
  • The Petroleum and Natural Gas Regulatory Board (PNGRB) has requested the Supreme Court for a direction to all city natural gas distribution entities, including Delhi-based Indraprastha Gas (IGL), to provide detailed break-ups of the maximum retail price (MRP) charged by them from consumers. Even the central government on February 18 had directed all city or local natural gas distribution entities for ensuring transparency in pricing. The break-up of the CNG (transport) and PNG (domestic) price needs to be disclosed to the consumers, PNGRB said, adding that the CGD entities were yet to comply with this directive.

  • Till the top court decides the issue, it would be fair and reasonable that all other entities covered under the PNGRB Act, 2006 start disclosing the break-up of the component of network tariff and compression charge for CNG included in the MRP charged by them on self-declaration based on their submissions to it, the board said in its fresh application. Such disclosure of transportation tariff based on self-declaration by the entities is in the interests of fair trade, it added. The board said that CGD entities “have given their tariff submissions which in their view should be charged from their customers. However, due to efflux of time in the appeal, the data needs to be further updated by the entities.” However, a bench headed by Justice KS Radhakrishnan refused to give an early date for hearing after senior counsel Arvind Dattar and advocate Liz Mathew wanted urgent hearing on the application.

  • PNGRB in April 2012 had directed gas utility company IGL to cut its network tariff to R38.58 per million British thermal unit against R104.05, down by around 63%. The regulator fixed CNG compression tariff at R2.75 a kg against R6.66/kg charged by IGL. IGL had appealed against this order in Delhi High Court, which in June last year held that the regulator had no jurisdiction to fix rates or regulate gas tariffs for entities like IGL. Aggrieved by this, the regulator had moved the apex court, which in August 2012 ordered that for the time being, it would be open to the Board to collect all the relevant information to fix any component of network tariff or compression charge for an entity but such fixation shall not be notified without its permission.



 
Petroleum Ministry's presentation on natural gas-IV: State-wise CGD infrastructure 3/24/2014 12:00:00 AM
 

Provided below are state-wise details on City Gas Distribution (CGD) infrastructure in the country:

S. No. State No. of CNG Station Domestic PNG Connections Industrial PNG Connections Commercial PNG Connections
1 Andhra Pradesh 29 1989 132 49
2 Assam   25215 371 857
3 Gujarat 326 1175945 3712 14867
4 Haryana 14 13952 132 49
5 Madhya Pradesh 15 2517 58 18
6 Maharashtra 186 685180 123 2151
7 Delhi 274 339486 209 887
8 Rajasthan 3 191 16 1
9 Tripura 4 13683 45 242
10 Uttar Pradesh 79 103922 798 406
Total 930 2362080 5596 19527


 
Petroleum Ministry's presentation on natural gas-IV: State-wise CGD infrastructure 3/21/2014 12:00:00 AM
 

Provided below are state-wise details on City Gas Distribution (CGD) infrastructure in the country:

S. No. State No. of CNG Station Domestic PNG Connections Industrial PNG Connections Commercial PNG Connections
1 Andhra Pradesh 29 1989 132 49
2 Assam   25215 371 857
3 Gujarat 326 1175945 3712 14867
4 Haryana 14 13952 132 49
5 Madhya Pradesh 15 2517 58 18
6 Maharashtra 186 685180 123 2151
7 Delhi 274 339486 209 887
8 Rajasthan 3 191 16 1
9 Tripura 4 13683 45 242
10 Uttar Pradesh 79 103922 798 406
Total 930 2362080 5596 19527


 
Gas price row: AAP may find company in Tripura 2/20/2014 12:00:00 AM
 
  • Former Delhi Chief Minister and Aam Aadmi Party leader Arvind Kejriwal may find a good support in Tripura’s Power Minister Manik Dey in his tirade against the Union Government’s decision to raise natural gas prices. While Kejriwal questions alleged corruption in the decision to almost double the price of domestically produced gas, the Tripura Government will be among the worst-hit by the price rise as over 90 per cent of electricity consumed in the State is gas-based. The rest is hydro-electric. In contrast, the national share of gas-based power generation capacity is a mere 9 per cent. Beginning June 2010, gas prices have increased three times in Tripura. First came a revision in prices from ₹2,376 to ₹4,700 a cubic metre. It further moved up to nearly ₹7,700 a cubic metre, after the rupee started falling last year. From April, the gas prices will rise further and cross ₹10,000 a cubic metre.

  • The impact is huge for Tripura that has successfully used economic development as a tool to contain extremism. For a hilly State where electricity consumption was once largely restricted to the capital city of Agartala, all the villages in Tripura are today connected by grid power. One of the corner stones of the State’s development campaign was cheap electricity. The State now pays nearly ₹40 crore of subsidy every year to ensure distribution of free electricity to its poor farmers and keep the household tariff at an average of ₹3.60 a unit.

  • While the low per capita consumption and lack of bulk users of electricity limit the prospect of cross subsidisation of tariff in Tripura, Dey was banking on export of surplus power to bridge this gap. But the calculation has gone haywire due to delay in implementation of the transmission line connecting Tripura with National Grid at Bongaigaon in Assam. The project has hit a green hurdle in Assam. The result is already telling on Tripura’s balance-sheet. Following the commissioning of the first 363.3 MW unit of ONGC Tripura Power Co (OTPC) on January 4, the State has been losing ₹25 lakh a day (over ₹90 crore on an annualised basis) for inability to sell the excess power. The losses will increase manifold, with another 250 MW increase in supplies scheduled this year.

  • The dual impact of the stretched finances of the State government due to revenue loss on surplus electricity and rise in gas prices is too big for Tripura to survive. Dey is apprehensive that the State may be headed for a sharp rise in electricity tariff, throwing the rural development plans out of gear. “On the one hand, we cannot increase our earnings, for failure of the Centre in implementing key infrastructure projects. And now, the gas prices are increased to unbearable levels. This is a development model for whom?” he asks. Apparently, Kejriwal has an answer to the question.



 
Higher allocation to city gas entities to hurt some majors 2/17/2014 12:00:00 AM
 
  • The decision by the ministry of petroleum and natural gas to increase allocation to city gas distribution (CGD) networks might hurt industrial customers such as Reliance, Essar, GAIL and Welspun, among other companies which have allocation in the non-priority sector, said an official source. The move had led to a cut in compressed natural gas (CNG) prices by Rs 15 a kg. The government had decided to raise allocation from domestic fields to city gas entities early this month, from 5.7 million standard cubic metres a day (mscmd) to 6.4 mscmd. Then, it decided another 1.9 mscmd would be added to this, taking the allocation to CGD networks to 8.3 mscmd. "This extra allocation would be cut from non-priority sectors like steel, refinery and petrochemicals," said a senior petroleum ministry official.

  • According to the ministry, an average of 0.2 mscmd would be required for cities across the country. Following the decision, Indraprastha Gas Ltd (IGL) cut its CNG prices by Rs 14.90 a kg to consumers in Delhi and Rs 16.55 a kg in Noida, Greater Noida and Ghaziabad. The consumer price of CNG is Rs 35.20 a kg in Delhi and Rs 40.15 a kg in the latter places. However, the drop would be a short-term relief. With the price of domestic natural gas set to double from the current $4.2 a million British thermal units to $8-8.4 an mBtu, the price of CNG might increase by Rs 5-8 an mBtu, say ministry sources. "These companies will have to depend on imported LNG (liquefied natural gas) now, which would cost them around $19 an mBtu. This will have a marginally negative impact on these companies," said Dhaval Joshi, research analyst, Emkay Global Financial Services.



 
Price of CNG and PNG: Wide variation across cities 2/13/2014 12:00:00 AM
 
  • There is a huge variation in price of CNG and PNG across cities. This is understandable given the variation in taxes and allocation of domestic gas for City Gas Distribution network.

  • As on December, 2013, CNG is priced highest in the city of Moradabad in Uttar Pradesh at Rs 69.88 per KG (Siti Energy Limited), followed by Mathura at Rs 69.80 per KG (Saumya DSM), Ujjain and Gwalior, at Rs 69 per KG (Aavantika Gas Limited) and Kanpur, Bareilly and Indore where CNG is currently sold at a price of Rs 68 per KG.

  • Within the NCR, CNG is dearest in Noida, Greater Noida and Ghaziabad (Rs 56.7 per KG), followed by Delhi (Rs 50.1 per KG), Faridabad (Rs 40.95 per KG) and Gurgaon (Rs 40 per KG).

  • Similarly, PNG is priced at Rs 41.04 per SCM in Moradabad, Rs 32.20 per SCM at Sabarkantha, Gandhinagar and Mehsana and at Rs 31.6 per SCM in Meerut.

  • For further details, please mail your query to support@infraline.com



 
Latest CGD data (as on December, 2013) 2/13/2014 12:00:00 AM
 

Provided here is data on City Gas Distribution (CGD) sector as on December, 2013. Following areas have been outlined:

  • Tax component in CNG and PNG price

  • Comparison of domestic PNG price with that of 14.2 KG domestic LPG cylinder in Delhi

  • Geographical areas covered by various entities and their authorisation status as granted by PNGRB

  • CNG stations in the country (state and entity-wise)

  • JVs formed by GAIL in CGD sector along with respective stake of partners

  • Areas yet to be covered by IGL in Delhi and NCR

For further details, please mail your query to support@infraline.com



 
LIC raises stake in Indraprastha Gas to 7.2pc - Prior to this, the nation's largest life insurer held 7.13 million shares of IGL 2/10/2014 12:00:00 AM
 
  • Life Insurance Corporation of India (LIC), the country's largest money manager, has raised its stake in Indraprastha Gas Ltd by over 2% to become the third largest shareholder in the company. LIC last week acquired 2.95 million equity shares of IGL - the firm that sells CNG in national capital, from the open market to increase its shareholding in the company from 5.097% to 7.204%, according to disclosures made by IGL to the stock exchanges.

  • Prior to this, the nation's largest life insurer held 7.13 million shares of IGL. GAIL India Ltd, the nation's largest gas distributor, and state refiner Bharat Petroleum Corp Ltd (BPCL) hold 22.5% stake each in IGL while the Delhi Government has 5% equity. LIC's acquisition of 2.107% additional shares has made it the third largest shareholder in IGL. Prior to this, Allard Partners Ltd with 5.93% shares was the third largest shareholder. HDFC Standard Life Insurance Co Ltd hold 4.78% stake in the firm.

  • IGL retails compressed natural gas or CNG to automobiles and piped cooking gas to households in Delhi and its adjoining towns - Noida, Greater Noida and Ghaziabad. It has over 8,500 kilometres of gas pipeline network and 296 CNG stations that cater to over 7.5 lakh vehicles and over 4.3 lakh households Delhi and adjoining towns. The company yesterday slashed CNG price by Rs 14.90 per kg and natural gas piped to household kitchens for cooking by Rs 5 per standard cubic meters. CNG in Delhi now costs Rs 35.20 per kg Rs 40.15 in Noida, Greater Noida and Ghaziabad, IGL said in a statement on Friday evening announcing the new rates effective from February 8.

  • Similarly, piped natural gas (PNG) rates were cut from Rs 29.50 per scm for consumption up to 30 scm in two months to Rs 24.50 per scm for consumption of up to 36 scm in two months. The rate cut follows oil ministry's decision to give city gas distribution firms cheaper domestic gas to meet all their needs for CNG and PNG supplies compared to the previous limit of 80% for most states. This was the first reduction in fuel rates in almost six years. CNG rate was cut in March 2008 when prices were cut by 30 paise following a reduction in excise duty. However, the relief may be temporary, as the prices of domestic natural gas - raw material for CNG and PNG - will almost be doubled to USD 8-8.2 from April 1. The rate hike may translate into a CNG price increase of Rs 10.6 per kg and PNG rates of Rs 8 standard cubic meters.



 
CNG price cut to offer temporary relief to consumers: Goldman 2/5/2014 12:00:00 AM
 
  • The cost of CNG, which will be reduced by up to Rs 15 per kg in the next few days following a rejig in natural gas allocation, will go up by Rs 10.6 a kg in April, when domestic gas prices almost double. The oil ministry yesterday said city gas distribution (CGD) companies would get cheaper domestic gas to meet all of their requirements for CNG and piped natural gas (PNG) supplies to households compared with the previous limit of 80% for most states.

  • As a result, Indraprastha Gas Ltd will cut CNG/PNG prices by about Rs 15 per kg and Rs 5 per cubic metre, respectively. CNG (compressed natural gas) in Delhi now costs Rs 50.10 per kg and piped cooking gas Rs 29.50 per standard cubic metre. "We note that this is only a temporary relief to consumers as the domestic natural gas prices will almost be doubled from the current USD 4.2 from April 1, thus forcing the CGD companies to raise CNG/PNG prices to pass on the increased costs. "In the absence of any offsetting subsidy, they would need to raise CNG prices by Rs 10.6 per kg and PNG prices by Rs 8 per standard cubic meter," Goldman Sachs said in a research note. It said the price of CNG in Delhi will fall to Rs 35.1 a kg from the current level and then rise to Rs 45.7 a kg in April.

  • Goldman Sachs estimates the price of locally produced natural gas will climb to USD 7.8 per million British thermal units in April from USD 4.2 currently after the Rangarajan formula for pricing domestic gas is implemented. The formula calls for pricing all domestically produced natural gas at the average of international hub rates and the cost of imported liquefied natural gas (LNG) in India. Oil Minister M Veerappa Moily yesterday said the price cut was possible because the government had decided to meet the entire need of CNG and PNG from domestic gas, which is subject to an administered pricing mechanism (APM). This eliminates the need to import costlier LNG.

  • Retail prices are set to fall in all states, except Maharashtra and Haryana, as city gas distributors stop buying higher-priced LNG and shift entirely to APM gas. City gas entities in Mumbai and Pune as well as Faridabad in Haryana get all of their requirements from APM gas. Goldman said the additional requirement of 1.92 million standard cubic meters a day of domestically produced gas will be met by cutting supplies to non-priority sectors. "We note all non-priority sector consumers facing a pro-rata cut in their domestic gas supplies may not be able to substitute with higher priced LNG, likely leading to marginally negative impact on LNG growth," it said.



 
CNG, piped cooking gas prices to turn cheaper - Govt decides to offer 100percent 'cheaper' domestic gas for city use 2/4/2014 12:00:00 AM
 
  • Prices of gas for the transport sector (autos, cars and commercial vehicles) and households using piped gas for cooking would reduce by 20-30 per cent. This is because the Government has decided to provide ‘cheaper’ gas produced from domestic fields for such use. This would come as a relief to consumers in several cities, including Delhi, Mumbai, Ahmedabad, Sonepat, Meerut, Bareilley, Indore, Surat and Hyderabad.

  • It is to be seen how soon the companies providing gas to cities pass on the benefit to consumers. GAIL Chairman and Managing Director B. C. Tripathi said the decision would be implemented immediately. But the companies may take a couple of days to pass on the benefit because of operational issues. Currently, due to shortage of domestically produced gas, many cities sell ‘expensive’ imported gas to their customers. For example, in Delhi and nearby areas, Indraprastha Gas supplies compressed natural gas (CNG) and piped natural gas (PNG) that comprise 80 per cent domestically produced and 20 per cent imported gas. Now, Indraprastha Gas would get 100 per cent domestic supply of gas.

  • This would lead to a drop in CNG prices in Delhi by about ₹ 15 a kg (about 30 per cent). At present, every kg of CNG costs ₹ 50.10. Similarly, there would be a reduction of about ₹ 5 per scm (about 20 per cent) for PNG customers. At present, PNG in Delhi costs ₹ 29.50 per scm up to a consumption of 30 scm in two months. Consumers in cities such as Ahmedabad, where supply to CNG and PNG consumers is met mostly by imported gas, would stand to benefit to a greater extent by the latest decision. The move of the Government is seen as another step to woo the common man just a few months before the general elections. However, Minister for Petroleum and Natural Gas M. Veerappa Moily says that there is no ‘election motive’ behind these decisions.

  • “This debate (to supply 100 per cent domestic gas for city distribution) has been on for the past four-five years. It has nothing to do with the elections. Our target is always to benefit the common man. If it helps the common man, we are happy. If some political party also stands to benefit, it is incidental,” Moily said. The Government has decided to supply 8.32 million metric standard cubic meters per day (mmscmd) of gas for city gas distribution against the earlier allocation of 6.8 mmscmd. The additional requirement of 1.92 mmscmd is to be met by imposing pro-rata cuts in supply of domestic gas (excluding those from blocks under the NELP regime) to sectors other than the priority sector. The sectors where gas supplies would be curtailed include petrochemicals, refineries, steel and small industrial consumers.

  • "We are not depriving anyone of gas. But cheaper gas would be given to CNG and PNG consumers. Industrial buyers would have to buy expensive gas,” said Petroleum Secretary Vivek Rae. However, the rider is that gas prices from all domestic sources is expected to be doubled from April 1 when the prices of the commodity would be determined by a formula-based mechanism. It is to be seen if this reduction in CNG and PNG price would be nullified after the new gas price comes into play. The Government also claims that such a move would encourage more cities to take up CNG and PNG projects. Currently, just 50-55 cities and towns have these facilities. The target is to expand the city gas network to another 300 cities.



 
Oil majors likely to get easy entry into CNG biz - Move will give CNG marketing rights to co with investment of at least Rs 20 bn in oil & gas sector 1/23/2014 12:00:00 AM
 
  • To open the compressed natural gas (CNG) network in India, the ministry of petroleum and natural gas will soon seek Cabinet approval for CNG marketing guidelines. According to an official, the move will give CNG marketing rights to companies that have investment of at least Rs 2,000 crore in the oil & gas sector. "Companies such as Indian Oil Corporation, GAIL, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Essar and Reliance Industries will be able to set up CNG stations across the country. Companies with lower investment but who already have CNG network rights with them, as city gas distribution entities, can also market CNG, according to the guidelines," the official said.

  • Currently, the CNG market has Indraprastha Gas, Mahanagar Gas, Gujarat Gas, Adani Gas and GAIL Gas, as well as local players such as Haryana City Gas Distribution. The regulations pertaining to CNG follow a notification by the government, delinking the rights for vending CNG used in automobiles from city gas distribution. Pooling of prices had led to a sharp increase in CNG prices across metros. The guidelines will make CNG stations akin to other retail fuel outlets. So far, city gas distribution operators enjoyed CNG marketing rights, within earmarked cities. Now, they will get exclusive rights for only five years. "If new entrants can strike a deal with local city gas distribution companies, they can even market it within the exclusivity period of five years," said the official quoted earlier.

  • Analysts feel the development will be positive for consumers and major players in the long run. "However, sourcing of gas can be a key challenge. Due to lack of domestic gas, they will have to depend on LNG (liquefied natural gas) at the rate of at least $18 per million British thermal units. This means CNG will be available at Rs 65-68 a kg, making it less preferred compared to diesel. Moreover, it will be difficult for companies to get higher volumes at this rate and consumers won't prefer conversion of automobiles to CNG at such high rates," said Dhaval Joshi, research analyst, Emkay Global Financial Services.

  • The petroleum ministry plans to bring 200 cities under the CNG network by 2015. According to estimates by GAIL India, an investment of about Rs 37,000 crore will be needed to cover 298 cities under the CNG network. Recently, CNG prices had seen a steep rise of Rs 4.5 a kg in Delhi. Ministry officials say prices will increase by Rs 8 a kg from April 1, owing to domestic natural gas prices rising to $7-8 per million British thermal units. An increase of every dollar in the price of domestic gas will result in a rise of Rs 2.93 a kg of CNG in cities entirely dependent on domestic gas.



 
CNG price may rise due to Centre's guidelines: Delhi govt to HC 1/3/2014 12:00:00 AM
 
  • The city government told the Delhi High Court that it apprehended rise in price of CNG due to reduction in allocation following new guidelines by Ministry of Petroleum and Natural Gas even asthe Centre said that any shortfall will be met by import of the fuel. The price of CNG or compressed natural gas in the national capital was just last week hiked by a steep Rs 4.50 per kg, the second increase in rates in three months. The guidelines, which may cause reduction in supply of CNG to Delhi, were issued by the Ministry in pursuance of a Gujarat High Court order that Ahmedabad should also get the fuel for domestic and vehicular usage at the same rate applicable to Delhi and Mumbai to enforce the right of equality. The supply of CNG is not affected in Delhi as the shortfall in domestic supply is being offset by import of CNG, the counsel for the Ministry said.

  • Justice Manmohan granted a week's time to the Centre to file its response to a petition filed by Delhi Contract Bus Association seeking that "the allocation and supply of domestic gas to the city of Delhi and National Capital Region through respondent 2 (Indraprastha Gas Ltd) be not reduced." However, Delhi government expressed apprehension that the Petroleum Ministry guidelines will have an adverse impact on commercial vehicle operators and any reduction in CNG allocation to Delhi would lead to fillip in prices of CNG and essential commodities.

  • The counsel for city government, in a written submission, said as an effect of redistribution, the domestic gas allocation for Delhi NCR would reduce resulting in more consumption of imported gas and will result in substantial price increase. It would adversely affect the transport sector in Delhi, the Delhi government said. The plea said the "guidelines for allocation/supply of domestic natural gas" to City Gas Distribution (CGD) entities for CNG (transport) and PNG (domestic) were "arbitrary, illegal, unconstitutional" and contrary to a 2002 apex court order. The Gujarat HC had directed the Ministry to maintain uniformity in allotment of natural gas and provide the fuel to Ahmedabad at the same rate it is supplied to Delhi and Mumbai. According to subsequent guidelines issued on November 14, 2013, the Centre decided to redistribute 5.75 MMSCMD (which is the present share of domestic gas in the entire consumption of gas for transport and domestic sector) among all entities/ cities.



 
CNG, piped gas prices hiked in Delhi NCR - Beyond consumption of 30 scm in two months, consumers would have to pay Rs 54 per scm 12/27/2013 12:00:00 AM
 
  • Indraprastha Gas Ltd (IGL), which supplies compressed natural gas (CNG) and piped cooking gas in Delhi, Noida, Greater Noida and Ghaziabad, has hiked prices. The CNG price would be revised by Rs 4.50 a kg in Delhi and Rs 5.15 a kg in Noida, Greater Noida and Ghaziabad. The new retail price would be Rs 50.10 a kg in Delhi and Rs 56.70 a kg in Noida, Greater Noida and Ghaziabad.

  • Similarly, the new consumer price of piped cooking gas to households in Delhi has been revised from Rs 27.50 per scm to Rs 29.50 per scm (up to consumption of 30 scm in two months). Beyond consumption of 30 scm in two months, the rate would be Rs 52 per scm. Due to the differential tax structure in the State of Uttar Pradesh, the applicable price of domestic piped gas in Noida, Greater Noida and Ghaziabad would be Rs 31 per scm up to consumption of 30 scm in two months, which has been increased from existing Rs 29 per scm.

  • Beyond consumption of 30 scm in two months, consumers would have to pay Rs 54 per scm. The company said it was raising prices due to increase in input costs because of reallocation of domestically produced gas quantities by the Government for all city gas distribution companies across the country. “There has been a reduction in allocation of APM (administered price mechanism) gas to us, which is forcing us to source more quantity of market-priced imported R-LNG, whose prices are currently on an upswing. This has affected our overall input cost by over 13 per cent,” IGL said. In addition, there has also been an increase in the operating expenses including increase in minimum wages announced by the Government with effect from October, it added.



 
GAIL India to flow natural gas under revised policy to city gas distribution soon 12/20/2013 12:00:00 AM
 
  • Gail is expected to start flowing natural gas to city gas distribution (CGD) companies according to ministry's revised allocation policy in next couple of days. Central government run Gail signed new agreements with Gujarat based city gas distribution companies completed signing fresh agreements with CGD companies for firm natural gas supplies. With this, natural gas prices for domestic and auto users will come down in Gujarat while it will go up in Mumbai and Delhi markets. Compressed natural gas users are paying highest over Rs 65 per kg in Gujarat while it cost less than Rs 50 today.

  • Industry sources revealed that CGD companies have already lined up desired financial arrangements through new letters of credit in favour of Gail that will meet 80% of their previous year's natural gas sale. "Except for HPCL, all the CGD companies operating in Gujarat have completed formalities with Gail. We are expecting reduction of Rs 10 per kg in case of compressed natural gas for auto users. Domestic users of piped natural gas too will get benefit of Rs 5-10 per standard cubic meter in Gujarat," said a top official of one of the CGD companies of Gujarat.

  • The development came after Gujarat High Court's recent order that directed petroleum ministry to divide cheaper domestic gas equally among all the CGD companies instead of favouring Gail promoted Indraprastha Gas in Delhi and Mahanagar Gas in Mumbai. In two separate petitions before Gujarat High Court in 2011, voluntary initiative Dhrangadhra Prakruti Mandal and Gujarat Rajya Autorickshaw Federation sought additional quota of natural gas for domestic and vehicular usage to Gujarat under administered price mechanism like Delhi and Mumbai markets.

  • Last month, petroleum ministry cancelled existing allocation of domestic gas for all city gas distribution entities. It directedGailto ensure uniformity in supply of domestic gas across all entities distributing compressed natural gas and piped natural gas. It will benefit GSPC Gas, Adani Gas, Gujarat Gas, Charotar Gas and Sabarmati Gas while HPCL that markets CNG in Ahmedabad is yet to complete its transaction with Gail.



 
CNG prices may be hiked in Mumbai after Government decides to divert some of its cheaper domestic gas to Gujarat 12/5/2013 12:00:00 AM
 
  • CNG prices in Mumbai may have to be hiked by about Rs 16 per kg and piped cooking gas by Rs 10 after the Government decided to divert some of its cheaper domestic gas to Gujarat. The Oil Ministry last month decided to allot the available domestically produced natural gas to all CNG retailers in the country at a uniform price. At present, cheaper domestic gas is mostly allocated to firms in Delhi and Mumbai while those in other cities have to depend on costlier imported gas. Gas to retailers in Gujarat is being made available by cutting supplies of Mahanagar Gas Ltd (MGL) of Mumbai. MGL, which sells compressed natural gas (CNG) to automobiles and piped cooking gas to households in Mumbai, last month wrote to the Oil Ministry saying “CNG and domestic PNG prices could be increased by about Rs 16 per kg and about Rs 10 per standard cubic meter to the transport segment and domestic households, respectively.”

  • The company currently gets about 2 million standard cubic meters per day of gas at a price of $4.2 per million British thermal unit. MGL said its supplies will be reduced by about 28 per cent to 1.45 mmscmd after the order is implemented. Oil Ministry officials said the order to redistribute the available domestic gas among all CNG and piped gas retailers will ensure growth of the city gas sector. Gas supplies to entities in Gujarat was to begin from December 1 but technical issues have delayed it. Gas coming from ONGC’s fields is short of the pressure required for the fuel to be pumped into the city gas network. Officials said the issue is being resolved.

  • The Gujarat High Court had on July 25 last year ordered gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as it was provided in Delhi and Mumbai. The Supreme Court upheld this order on September 30. The Oil Ministry allocated 6.4 mmscmd of domestically produced gas to meet almost 80 per cent of the requirement of CNG and PNG in all cities. Allocation is to be made in proportion to the demand for CNG and PNG in cities, the order said, adding 8.02 mmscmd of gas is consumed in the CGD sector currently. Of the 6.4 mmscmd allocated for CGD sector, 5.93 mmscmd would come from fields operated by the State-owned Oil and Natural Gas Corp (ONGC) and the remaining 0.47 mmscmd from the BG-operated Panna/Mukta and Tapti fields in western offshore.



 
GAIL directed to sell fuel at same price in all cities 11/21/2013 12:00:00 AM
 
  • The Ministry of Petroleum and Natural Gas has directed GAIL (India) Ltd to sell natural gas at the same rate to all the domestic and vehicular customers. This follows the July 25, 2012 order of Gujarat High Court asking the Government to allot natural gas at the same rate to Ahmedabad, as it is supplied to Delhi and Mumbai to enforce right of equality. Currently, GAIL supplies cheaper gas to consumers in the National Capital and Mumbai, while expensive imported gas is sold to remaining parts of the country. “GAIL would supply domestic gas to city gas distribution (CGD) entities for purpose of CNG (transport) and PNG (domestic) at uniform base price. However, the delivered price of domestic gas to individual CGD entities for CNG and PNG may vary on account of transportation charges and local taxes and duties,” the Ministry has said.



 
Uniform gas prices for CGD companies: Petroleum ministry issues guidelines 11/21/2013 12:00:00 AM
 
  • As confirmed earlier by the Centre that a policy has been framed to ensure availability of domestic gas at uniform price to all CGD companies to meet the demand from CNG (Transport) and PNG (Domestic) customers, the Ministry of Petroleum and Natural Gas has released a set of guidelines which will pave the way for equitable distribution of domestic gas priced at $4.2 per MMBTU to all CGD companies operating in India without any discrimination.

  • The guidelines released by the Petroleum Ministry very clearly pronounces that the cities of Delhi and Mumbai will no longer enjoy a privileged status in terms of getting higher quantum of domestic gas than the less fortunate private sector CGD companies in Gujarat. As per the directives from the Gujarat High Court, the government has to allot natural gas at a uniform price to gas retailers in different cities. Presently, cheaper domestically produced gas is mostly allocated to firms in Delhi and Mumbai for sale to automobiles and households, while costlier, imported gas is sold to such suppliers in other cities. Compressed natural gas (CNG) is used by automobiles and piped natural gas (PNG) is supplied as a cooking fuel. The Gujarat High Court had on July 25 last year ordered that gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as in Delhi and Mumbai.

  • As per guidelines issued, the proportion of supply of domestic gas vis-a-vis R-LNG, with respect to consumption in CNG (transport) and PNG (domestic) segments has to be kept uniform for all CGD entities. To start with, actual consumption figures of CNG (transport), PNG (domestic) segments of CGD entities for the year 2012-13 (8.02 MMSCMD) would be taken as the base figure for determining the entity wise supply of domestic gas for CNG (transport) and PNG (domestic). The base figure includes 5.75 MMSCMD of domestic gas and 2.27 MMSCMD of R-LNG.

  • To make domestic gas supplies available to the CGD entities, for supply to CNG (transport) and PNG (domestic) sectors, 6.4 MMSCMD (0.47 PMT + 5.93 APM) of domestic gas is allocated to GAIL. This allocation will be supplied fully and would be placed in no cut category. This implies that the requirement of 6.4 MMSCMD would essentially be met by the present level of APM supplies of 5.21 MMSCMD for CNG (transport) and PNG (domestic) and PMT supplies of 0.47 MMSCMD to Gujarat Gas for CNG (transport) and PNG (domestic) and an additional supply of about 0.72 MMSCMD by imposing proportionate cuts on all APM and PMT customers in the non-priority sector. The requirement beyond 6.4 MMSCMD may be sourced by CGD entities through R-LNG or any alternative source as may be available. The fall out of this decision would be a negative revision in supply of domestic gas from APM and PMT gas supply sources to non-priority segment customers which include any customers getting gas from CGD companies in the industrial and commercial segment as well as customers from the petrochemical, refineries and steel sector.

  • Petroleum Ministry has directed GAIL to ensure that uniformity in supply of domestic gas across all CGDs for CNG (transport) and PNG (domestic) segments is maintained without discrimination among CGD entities which is subject to operational imperatives. The consumption figures of CNG (transport) and PNG (domestic) for the purpose of proportionate distribution of domestic gas to CGD entities shall be reviewed by GAIL based on figures furnished by PPAC. The periodic review can be on annual basis or periodicity as decided by the Petroleum Ministry. In case of increase in demand (including that arising from new CGD entities) for CNG (transport) and PNG (domestic), GAIL has to ensure distribution of the available quantity of domestic gas for CNG (transport) and PNG (domestic) in proportion to the demand, without discrimination among CGDs. In such a scenario, if new CGD entities join the existing fleet and if there is no additional allocation of domestic gas made to the CGD sector in the next few years, prices of CNG and PNG are set to rise across all cities in operation as pro rata cuts would be made in existing supplies to CGD entities to accommodate new demand.

  • As per the guidelines, PPAC would furnish monthly report to GAIL and Petroleum Ministry on consumption of natural gas - separately for domestic gas and R-LNG - by CGD entities by 7th day of the next month, segment wise and in order to operationalize the above arrangements, GAIL would enter into necessary swapping arrangements with other entities wherever required.

  • In order to implement the guidelines as soon as possible, Petroleum Ministry has directed GAIL to finalize the operational modalities for these arrangements which should come into effect at the earliest but not later than November 30, 2013 with the exception of poll bound states/UTs of Delhi, Madhya Pradesh, Chhattisgarh, Rajasthan and Mizoram where the orders will be effective only after completion of election process.

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Government orders sale of gas at uniform price to CNG projects in cities 11/20/2013 12:00:00 AM
 
  • After a rap from the Gujarat High Court, the government has decided to allot natural gas at a uniform price to retailers of the fuel in different cities. Presently, cheaper domestically produced gas is mostly allocated to firms in Delhi and Mumbai for sale to automobiles and households, while costlier, imported gas is sold to such suppliers in other cities. Compressed natural gas (CNG) is used by automobiles and piped natural gas (PNG) is supplied as a cooking fuel. The Gujarat High Court had on July 25 last year ordered that gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as in Delhi and Mumbai.

  • The Supreme Court upheld the order on September 30 but it was not implemented. The Gujarat High Court last week ordered the oil secretary to appear before it if the order was not complied with by November 18. The oil ministry on November 14 issued guidelines for “allocation/supply of domestic natural gas to CGD entities” for sale to automobiles and households. It allocated 6.4 million standard cubic metre per day of domestically produced gas, which is currently sold at $4.2 per million British thermal units, to meet almost 80% of the requirement of CNG and PNG in all cities.

  • Allocation to cities is to be made in proportion to demand, the order said, adding that presently, 8.02 mmscmd of gas is consumed by city gas projects. State-owned gas transportation and marketing monopoly GAIL India has been asked to ensure "uniformity in supply of domestic gas across all CGDs for CNG and PNG segments without discrimination among CGD entities, subject to operational imperatives," the order said. This would mean that some of the cheaper domestic gas meant for CGD entities in Delhi and Mumbai will be diverted to other cities such as Ahmedabad.

  • Any supply shortfall will be met from imported liquefied natural gas (LNG), which costs almost three times more than domestically produced gas. "The consumption figures of CNG and PNG for the purpose of proportionate distribution of domestic gas to CGD entities shall be periodically (annually) reviewed by GAIL. "In case of increase in demand (including that arising from new CGD entities) for CNG and PNG, GAIL would ensure to distribute the available quantity of domestic gas for CNG and PNG in proportion to the demand, without discrimination among CGDs," the order said. Of the 6.4 mmscmd allocated for CGD projects, 5.93 mmscmd would come from fields operated by state-owned Oil and Natural Gas Corp and the remainder from the BG-operated Panna/Mukta and Tapti fields off the west coast.



 
Give CNG at administered price in Gujarat by Nov 18: HC to Centre 10/26/2013 12:00:00 AM
 
  • The high court (HC) here on Friday rejected the central government’s plea for time to provide compressed natural gas (CNG) to Gujarat at the same rate as Mumbai and Delhi under the administered price mechanism (APM), and directed it to comply with the Supreme Court order in this regard by November 18.

  • The central government had sought 16 weeks time to frame a uniform policy to supply CNG under APM to Gujarat and other states. This proposal was opposed by the Gujarat government and the petitioner on whose public interest suit (PIL) the HC had passed the judgement last year. The Supreme Court on September 30 had upheld the Gujarat HC’s judgement of July 25, 2012 directing the Centre to supply CNG to Gujarat for domestic and vehicular purposes under the APM. The apex court was hearing an appeal by the Centre against the Gujarat HC order. On Friday, coming down heavily on the central government, a bench of Chief Justice Bhaskar Bhattacharya and J B Pardiwala said 15 months had passed since it directed the central government to provide CNG to Gujarat at the same rate as Mumbai and Delhi, but nothing had been done.

  • The court further directed that if the Centre was not able to comply by November 18, the secretary of the ministry of petroleum and natural gas would have to personally appear before it. “We are of the view that after our order has not been interfered with by the Supreme Court, there is no justification in giving further time in implementation of this court's order of July 25, 2012. There can hardly be a necessity of 16 weeks time after over 15 months have passed after this court’s order,” the court said in its order. “We direct the government of India to implement this court's order positively by November 18. If the decision of the court is not implemented, the secretary, ministry of petroleum and natural gas will personally remain present in the court on November 18,” it added.

  • During the hearing, assistant solicitor general I H Syed, appearing on behalf of the Union government urged the court for 16 weeks time as in order to comply with the court's order, the central government would require to modify the allocation and distribution of CNG to existing customers. He clarified that the union was not avoiding implementing the court's order. He further said that the new policy will be uniform across all states to avoid any further litigation.

  • The original PIL was filed in 2011 by one Dhrangadhra Prakrutik Mandal which had alleged discrimination against Gujarat in the allocation of natural gas at APM in comparison with metropolises like Delhi and Mumbai. It had sought the high court’s direction to the Centre to prioritise and diversify the unutilised natural gas from the non-priority sector to the city gas distribution for their domestic and vehicular usage, as directed by the Supreme Court in one of the cases to reduce the pollution level and cost of living.



 
GAIL partially divests stake in Hong Kong-listed city gas distribution firm China Gas Holdings for Rs 3.85 billion 10/26/2013 12:00:00 AM
 
  • GAIL India Ltd said it has sold more than a fourth of its 4.6 per cent stake in Hong Kong-listed city gas distribution firm China Gas Holdings for Rs 385 crore. GAIL, which made a strategic investment of Rs 137 crore by acquiring 210 million shares of China Gas in 2005, has sold 60 million shares, company’s CMD, B C Tripathi, said. “We had acquired the shares at Hong Kong Dollar 1.1 and we sold the shares at HKD 8.2,” he said.

  • The gas utility plans to keep a small strategic interest in the company that will help it retain its board position in China Gas Holdings. “Our gross realisation is Rs 385 crore,” he said, adding that the company has to pay taxes like capital gains on this realisation. The board of GAIL had accorded approval to partially divest its equity stake in China Gas for recouping of entire initial investment, while retaining the strategic advantage as envisaged at the time of initial investment. “We sold the stake to capitalise on the high price of the shares on the Hong Kong stock exchange,” he said. China Gas has exclusive rights to set up gas distribution projects in 42 cities in China. GAIL picked up equity in the company as China was keen to replicate Delhi’s success in using natural gas as a vehicular and domestic fuel in its cities, primarily Beijing, before the 2008 Olympics.



 
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