Adani Gas is one of the biggest private players in the city gas distribution (CGD) segment. The company and its joint venture (JV), Indian Oil-Adani Gas Private Limited (IOAGPL), have been allocated 38 geographical areas (GAs) by the Petroleum and Natural Gas Regulatory Board (PNGRB), with each company receiving an equal number of GAs. Of the 406 districts to be covered for providing piped natural gas, over 17 per cent (71 districts) come under the purview of the two companies.
As of February 2020, Adani Gas had operationalised almost all the GAs that were allocated to it in the ninth and tenth bidding rounds, barring a few GAs in the southern states. It has connected about 430,000 homes with piped gas and has a base of about 4,000 commercial and industrial customers. The company has set up 95 compressed natural gas (CNG) stations and laid a pipeline network of around 6,000 km. Besides, IOAGPL has operationalised 11 GAs. It has set up about 30 CNG stations and provided around 250,000 domestic connections.
Key issues and challenges
One of the major challenges faced by the CGD industry is the lack of coordination between the central and state authorities, resulting in delayed project implementation. While licences for the GAs are granted by the PNGRB, the on-ground execution takes place in the states. Thus, the timely completion of work largely depends on state-level policies. To do away with inconsistencies in the policies at the central and state levels, the PNGRB has recently drafted the One India-One Policy, with support from major industry players including Adani Gas. The policy aims to make the ecosystem conducive for all CGD players. The policy aims to ensure uniformity in the various processes involved in CGD dev-elopment across states. To this end, state governments are currently releasing various circulars and notifications.
Another major area of concern for the industry is the widespread outbreak of Coronavirus that has led to delays in receipt of orders for equipment and components from China and other countries. With Indian capacities completely booked, CGD companies are struggling to cope with the delayed delivery of equipment, particularly dispensers, compressors, boosters and meters.
Future plans and outlook
According to reports published by the Ministry of Petroleum and Natural Gas, the gas consumption of the CGD industry is likely to reach 27-30 million metric standard cubic metres per day (mmscmd) over the next three to five years. The CGD landscape is expected to change significantly with the development of CNG stations and amenities at strategic locations. In the recent bidding rounds for GAs, the segment has also witnessed a shift in the PNGRB’s allocation policy from city-based gas distribution to regional gas distribution. The new GAs consist of districts already connected to the tap-offs as well as those that are far away from the pipelines. To cater to the areas without tap-offs, Adani Gas has placed significant orders to set up small-scale LNG terminals.
Adani Gas and IOAGPL have planned a combined investment of about $2 billion in the coming five years. The former’s sales, currently at about 1.95 mmscmd, is about to touch the 2 mmscmd mark. The company has committed to setting up 500 additional CNG stations in the next eight years as part of its minimum work plan (MWP) under the previous two rounds of bidding. Meanwhile, IOAGPL has committed to setting up another 1,000 CNG stations and plans to set up 100 CNG stations in the next one year. With regard to inch-km of steel pipelines, Adani Gas plans to overachieve its MWP targets significantly so that it can monetise the GAs earlier. The company foresees a huge potential for CNG stations in the country. In GAs such as Ahmedabad, which has 65 CNG stations at present, long queues outside CNG stations are not uncommon. Considering the high demand for CNG, Adani Gas does not consider its plan to set up 500 CNG stations in 15 new GAs as overoptimistic. The development of gas transmission infrastructure is being undertaken at a pan-India level with the coverage of 406 districts till the tenth CGD bidding round.
Based on remarks by Suresh Manglani, Chief Executive Officer, Adani Gas, at a recent India Infrastructure conference