The city gas distribution (CGD) sector has been severely impacted due to the outbreak of the Covid-19 pandemic. While CGD operators faced a number of challenges due to the pandemic and also missed their targets, they have been able to bounce back to pre-Covid levels with their concerted efforts. In an interview with Indian Infrastructure, Dilip Kumar Pattanaik, executive director, Hindustan Petroleum Corporation Limited (HPCL), shares his perspective on the company’s current CGD network, impact of Covid-19, issues faced, future plans and the way forward for the sector…
What is the current status of network development in the geographical areas that have been authorised to HPCL?
HPCL has successfully secured authorisation in 10 geographical areas (GAs) in the 9th and 10th rounds of CGD bidding. The pandemic and the subsequent lockdown hampered the site work for three to four months. However, HPCL was able to commission and operate 25 compressed natural gas (CNG) stations in the authorised GAs. As of December 2020, HPCL operates a total of 620 CNG stations in its retail outlet (petrol pumps) across India. Of these, it is operating 206 CNG stations with its four joint ventures.
What are HPCL’s capex plans for the CGD sector for the next two to three years?
HPCL has a CGD capex plan of Rs 25 billion for the next two to three years. The majority of it will be used for infrastructure development that is in the pipeline, CNG stations and domestic piped natural gas (PNG) connections.
How was the performance of HPCL’s CGD business during April-September 2020, in terms of revenue generation (PNG and CNG sales), commissioning of CNG stations, and provision of domestic, industrial and commercial connections?
The outbreak of Covid-19 did impact our plans to a large extent. Physical work was halted for four to five months. We can still feel the impact of the lockdown on supply items as vendors are under pressure of delivering items on time. However, in these tough times we were able to commission 25 CNG stations, and with the current pace, we are confident to exceed our targets.
How has the Covid-19 pandemic impacted the minimum work programme targets set for the upcoming GAs/CGD networks?
The pandemic and subsequent lockdown resulted in a complete work halt for four to five months. We utilised the time for planning and revising our action plans. Despite the mild setback, we were able to bounce back and are confident to meet the targets.
What are the overall investment requirements, plans and targets for the upcoming GAs (currently under development) authorised to HPCL?
Looking at the current pace of CGD development, we can expect an investment of over Rs 90 billion in the next 8-10 years for these 10 GAs.
What are your plans regarding the use of small-scale LNG for CNG and PNG supply? What are the upcoming projects and investments in this space?
HPCL have been awarded four GAs in West Bengal that are proposed to be fed by the GAIL pipeline. This pipeline is expected to reach the GAs early next year. Since the authorised GAs have a huge untapped potential, we at HPCL are exploring the possibility of feeding PNG and CNG through small-scale LNG (SSLNG). Apart from achieving the targets, SSLNG will assist us in seeding the gas market in these areas as well as in early monetisation.
What are the future technologies being considered for deployment in the post-Covid world for automating the CGD business?
With social distancing being the current norm, HPCL has taken several steps to mitigate interaction through use of automated technologies. Currently, we are exploring technologies such as smart networks and mobile refuelling units to provide a seamless and intuitive experience to consumers without any physical interaction.
What is the short- and medium-term outlook for the CGD sector?
After the 9th and 10th rounds, a total of 402 districts covering 70 per cent of India’s population have been covered by the CGD network. It is understood that the Petroleum and Natural Gas Regulatory Board is actively considering the 11th round of CGD bidding. The government also has plans of opening up markets in places where marketing exclusivity has ended. The unified pipeline tariff implementation is also at an advanced stage. These government initiatives will attract major investments in the CGD sector, and therefore the outlook for this sector seems bright.