Gujarat is the most developed gas market in the country. Natural gas forms 25 per cent of the state’s energy basket, much higher than the national average of merely 6 per cent. The Gujarat State Petroleum Corporation (GSPC), an undertaking of the Gujarat government, has played a key role in developing the state’s gas-driven economy. The group has a presence in both the upstream and downstream segments. Its city gas distribution (CGD) companies – Gujarat Gas Limited (GGL) and Sabarmati Gas Limited (SGL) – operate the largest CGD network in the country.
Gujarat’s success story
Gujarat has been a pioneer in creating a gas-based economy. The state’s natural gas consumption has witnessed a huge increase in the past two decades and, at present, accounts for 32 per cent of the total gas consumption in the country. Further, it has become the first state to be fully covered by a CGD network after the ninth and tenth bidding rounds. Currently, around 605 compressed natural gas (CNG) stations are operating in Gujarat State and over 2.2 million piped natural gas (PNG) connections have been provided.
Several factors such as favourable policies, availability of gas, and presence of robust pipeline infrastructure and liquefied natural gas (LNG) terminals have been instrumental in the successful penetration of natural gas in Gujarat. The state government has followed a philosophy of creating demand rather than following it. Recently, schemes such as the CNG SahbhagiYojana and the PNG SahayYojana have been launched to further drive gas consumption in the state. The government has also encouraged manufacturing units to use natural gas and the fuel is being supplied to several industries.
Further, the gas transmission network has increased almost sevenfold since the early 2000s and has played a crucial role in increasing the share of gas. The state is also home to three operational LNG terminals – Dahej, Hazira and Mundra – with a total capacity of 27.5 million tonnes per annum.
GSPC’s existing gas infrastructure
GSPC Group companies are present across the energy value chain from exploration and production, to gas transmission, regasification terminals and gas marketing. GSPC’s subsidiary, Gujarat State Petronet Limited (GSPL) is the second largest gas transmission company after GAIL (India) Limited and operates a gas grid of 2,692 km. Further, a GSPL-led consortium is also undertaking the Mehsana-Bathinda, Bathinda-Jammu-Srinagar and Mallavaram-Bhilwara pipeline projects. GSPC also owns a stake in the Mundra LNG terminal.
The group, through its companies GGL and SGL, has the largest CGD network in the country with a market share of 34 per cent and sales volume of 10.5 million standard cubic meters per day. The two companies have the authorisation to supply natural gas in 29 geographical areas (GAs) covering 48 cities and one union territory. GGL and SGL have together set up over 435 CNG stations in Gujarat accounting for 24 per cent of the total CNG stations in the country. Further, they have provided PNG connections to more than 1.56 million households in the state. They have also connected over 3,900 industrial and 13,000 commercial consumers.
GGL and SGL account for 88 per cent of the CGD sales in Gujarat, with entities such as Adani Gas, Vadodara Gas and IRM Energy making up the rest. The two GSPC group companies are unique CGD entities with 74 per cent of sales being to the industrial segment, 19 per cent to the CNG segment, 6 per cent to domestic households and the balance to commercial consumers. In the past couple of years though, the CNG segment has also witnessed high-paced growth with an increase in the number of CNG stations being set up.
Future expansion plans
In the ninth and tenth rounds of bidding, GSPC has received authorisation to supply natural gas in 18 districts spread across seven GAs. All the new GAs have been bagged by GGL and are located in Haryana, Rajasthan, Punjab, Madhya Pradesh and Gujarat. The company plans to lay 1,100 km of steel pipelines in the next three years. Further, in areas that lack pipeline connectivity, the LNG and liquefied CNG routes will be leveraged.
Under the CNG SahbhagiYojana, GGL and SGL are expected to add 450 new stations in the coming three years. For the first phase, letters of intent for 215 stations have already been issued. The state government also plans to add a fleet of 1,000 CNG buses. Moreover, there are plans to connect 450,000 households with PNG connections in the next few years.
Based on remarks by A. Ramana Kumar, Managing Director, SGL, at a recent India Infrastructure conference