Views of D.K. Sarraf

“In a span of one and a half years, the number of GAs has increased two and a half times”

The city gas distribution (CGD) segment has witnessed a number of noteworthy developments over the past one-two years. Fresh licences have been awarded by the Petroleum and Natural Gas Regulatory Board (PNGRB) and networks in existing geographical areas (GAs) are being expanded. At a recent industry event, D.K. Sarraf, chairperson, PNGRB, talked about upcoming CGD infrastructure, unaddressed issues affecting the CGD business, new gas pipeline projects, and the future outlook for the gas industry. Excerpts…

Launched in November 2018, the tenth round of bidding covers 50 GAs spread across 124 districts in 14 states, comprising 24 per cent of India’s population and 18 per cent of its area. The closing date for bids was February 5, 2019. A total of 225 bids from 25 entities were received for the GAs offered under the round. After bid evaluation, the board approved letters of intent to 12 successful entities for all 50 GAs in a record time of three weeks. Recently, in August 2019, the formal announcement for commencement of works pertaining to the tenth CGD bidding round took place. On completion of works under this round, natural gas will become available in 228 GAs, comprising 402 districts spread across 27 states and union territories. This will represent approximately 70 per cent of the country’s population and 53 per cent of its geographical area.

In a span of one and a half years, the number of GAs has increased two and a half times – from 92 to 228, and the population coverage has gone up from 17 per cent in 2017 to over 70 per cent at present. However, a lot still remains to be achieved by CGD companies. Issues with regard to securing right of use and permissions for laying pipelines from entities such as Indian Railways, the National Highways Authority of India, forest departments and state governments continue to impact project execution. Further, dedicated policies for the CGD segment and a single-window clearance mechanism are in place only in a few states. To develop compressed natural gas stations, obtaining multiple and time-consuming permissions pose a challenge. Availability of land is another pressing issue. Most importantly, the goods and services tax remains to be made applicable on natural gas.

With regard to the PNGRB’s role, it has been working on various market reforms in the natural gas sector. The bottom line of each reform initiative is to make the price of gas – as a commodity – at the consumer’s burner-tip affordable and simultaneously ensure that the investment environment in the sector remains positive. Some of the initiatives in progress are bringing competition in the CGD segment after expiry of the marketing exclusivity period, revising the bidding model for natural gas pipelines and for determining tariffs for gas pipelines and, most importantly, introducing the gas trading platform.

During the past two years, the support of the Ministry of Petroleum and Natural Gas (MoPNG) has also been encouraging. Several new pipelines have been authorised. Among these is the Jagdishpur-Haldia-Bokaro-Dhamra-Barauni-Guwahati pipeline, also known as the Urja Ganga pipeline. The 3,300 km pipeline covers states such as Uttar Pradesh, Bihar, Jharkhand, West Bengal, Odisha and Assam.

The 1,656 km North-East Gas Grid, which aims to provide natural gas in the eight north-eastern states, was also authorised by the ministry. The grid will cover cities such as Itanagar, Dimapur, Kohima, Aizawl, Agartala, Shillong, Silchar, Gangtok and Numaligarh. Other key pipeline projects authorised by the MoPNG include the 700 km Sirkakulam-Angul pipeline, covering Andhra Pradesh and Odisha, being constructed by GAIL; the 315 km pipeline from Kanai Chhata to Srirampur in West Bengal, connecting Haldia with the West Bengal-Bangladesh border, to be executed by H-Energy Private Lim-ited; and the 667 km Kakinada-

Vijayawada-Nellore pipeline in Andhra Pradesh. Recently, the tender was floated for the development of the 1,780 km Mumbai-Nagpur-Raipur-Jharsuguda cross-country pipeline with branches to Jabalpur, covering states of  Maharashtra, Chhattisgarh and Odisha.

These projects will add another 9,000 km to the existing gas pipeline infrastructure. The PNGRB is now commissioning a study to identify gaps in the country’s natural gas pipeline infrastructure, so that access to natural gas can be improved further. Meanwhile, the capacity to import liquefied natural gas is on the rise. Facilities at Ennore and Mundra have already been established, while projects at Jaigarh, Dhamra, Chhara, Jafrabad, etc. are under way.

Domestic gas production is also slated to show significant improvement in the coming years – the Oil and Natural Gas Corporation and the Reliance Industries Limited-BP consortium have committed significant investments. More investments in the upstream sector are expected on the back of progressive policy decisions by the government.

In short, the future of the gas industry is bright. Significant works are under way to increase domestic production, import capacity, pipeline network and last-mile connectivity. In addition, several steps have been taken and many are being taken to create a market environment that is fair and friendly to all stakeholders.

GET ACCESS TO OUR ARTICLES

Enter your email address