Although NTPC tenders and captive coal blocks make news, the future of the City Gas Distribution (CGD), especially the Piped Natural Gas (PNG) is uncertain, even as the sector is attracting new players in associations inked by ONGC and OIL with BPCL and IOCL due to the lack of enough domestic gas availability and the increase in the price of RLNG. Currently, the two main players in the City Gas Distribution are Indraprastha Gas Limited (IGL) in Delhi and NCR (a joint venture between GAIL, Bharat Petroleum Corporation and the Government of National Capital territory) and Mahanagar Gas Limited (MGL) in Mumbai.
Compared to delay in completion of NTPC projects, the introduction of PNG for households and CNG for the transport as part of CGD was done quickly to address the rising pollution levels. In 1990s, two major pilot projects were launched in Delhi and Mumbai through these two joint venture companies to minimise the air pollution in these top metros.
Unlike the NTPC projects, the present scenario is different. Due to the lack of availability of domestic gas, the City Gas Distributors supply imported gas or RLNG (an expensive fuel compared to domestic gas) to the consumers across domestic households and various industries. Thus, the consumers in India, who mainly use gas for cooking purposes at homes, find the government subsidised LPG (Liquid Petroleum Gas) cheaper to PNG. The government itself is still analysing whether PNG is a viable fuel for Indian domestic households.
Moreover, LPG is also highly subsidised and the government would never withdraw the entire INR 300 subsidy to the LPG anytime soon, which makes it very competitive for PNG to make way to Indian homes. The absurdity of supplying PNG to domestic homes can be gauged from the fact that a company like IGL gets RLNG at Rs 23 per cubic meter and has to sell it at just Rs 16.85 per cubic meter, which is no way sustainable. It is likely that this would make as much if not less news like the NTPC tenders.
However, IGL, one of the major CGD players is initiating tie-ups with brown goods appliances manufacturers such as A. O. Smith, Kohler to make gas powered geysers, water heaters and generators. This step would promote the usage of gas. The government should also focus on captive coal blocks.
Compared to delay in completion of NTPC projects, the introduction of PNG for households and CNG for the transport as part of CGD was done quickly to address the rising pollution levels. In 1990s, two major pilot projects were launched in Delhi and Mumbai through these two joint venture companies to minimise the air pollution in these top metros.
Unlike the NTPC projects, the present scenario is different. Due to the lack of availability of domestic gas, the City Gas Distributors supply imported gas or RLNG (an expensive fuel compared to domestic gas) to the consumers across domestic households and various industries. Thus, the consumers in India, who mainly use gas for cooking purposes at homes, find the government subsidised LPG (Liquid Petroleum Gas) cheaper to PNG. The government itself is still analysing whether PNG is a viable fuel for Indian domestic households.
Moreover, LPG is also highly subsidised and the government would never withdraw the entire INR 300 subsidy to the LPG anytime soon, which makes it very competitive for PNG to make way to Indian homes. The absurdity of supplying PNG to domestic homes can be gauged from the fact that a company like IGL gets RLNG at Rs 23 per cubic meter and has to sell it at just Rs 16.85 per cubic meter, which is no way sustainable. It is likely that this would make as much if not less news like the NTPC tenders.
However, IGL, one of the major CGD players is initiating tie-ups with brown goods appliances manufacturers such as A. O. Smith, Kohler to make gas powered geysers, water heaters and generators. This step would promote the usage of gas. The government should also focus on captive coal blocks.
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