Adani Total Gas Limited (ATGL) is one of the biggest city gas distribution (CGD) players in the country. It is a joint venture (JV) between the Adani Group and France-based TotalEnergies, each holding a 37.4 per cent stake in the company, with the remaining 25.2 per cent owned by the public. In addition, ATGL has a JV company with Indian Oil Corporation Limited, called Indian Oil-Adani Gas Private Limited (IOAGPL). ATGL is aiming for robust development of CGD infrastructure, along with development of electric vehicle (EV) charging infrastructure and Compressed Biogas (CBG) plants. It is also looking to venture into setting up Liquefied Natural Gas (LNG) fueling stations across the country. At a recent India Infrastructure conference, Suresh P Manglani, executive director and chief executive officer, ATGL, discussed the growth of the Indian gas sector, digital deployment and the outlook for the sector. Excerpts…
CGD’s evolving landscape
In 2022, the CGD ecosystem was enveloped in pessimism due to the Russia-Ukraine conflict and significant fluctuations in gas prices. In addition to this, prices of alternative fuels, particularly liquefied petroleum gas and propane, demonstrated varying trends compared to natural gas prices, leading to various challenges. Nonetheless, over the course of time, the sector has stabilised and witnessed an increase in volume, accompanied by fast-paced infrastructure development. The recent moderation of gas prices through the administrative price mechanism by the government, and the subsequent reduction in compressed natural gas (CNG) and piped natural gas (PNG) prices by CGD players, has led to an increase in consumption levels. In the future, gas consumption volume will witness a further increase owing to demand from key segments such as transport and industries.
In October 2023, the Petroleum and Natural Gas Regulatory Board launched the 12th CGD bidding round, giving a
further impetus to the gas sector. Under this, seven geographical areas (GAs) have been announced, covering five north-eastern states, namely, Arunachal Pradesh, Meghalaya, Manipur, Nagaland and Sikkim, and the union territories of Jammu & Kashmir and Ladakh.
In a bid to curtail the ever-increasing gas prices, the government also approved the recommendations of the Kirit Parikh committee in April 2023. The new mechanism links gas prices to 10 per cent of the Indian crude oil basket and allows for a monthly revision. It has a floor price of $4 per mmBtu and a ceiling price of $6.5 per mmBtu. The floor and ceiling prices will remain unchanged till 2025, after which ceiling prices will increase by $0.25 per mmBtu annually. The change in the pricing mechanism is a major reform by the government in the interest of end-consumers, as well as to promote the holistic development of the CGD sector.
“Technology adoption is a must to ensure that businesses run efficiently and effectively.”
Further, original equipment manufacturers (OEMs) are focused on improving CNG vehicle sales. During the April-June period of 2023-24, of the total automobile sales by Maruti, 28 per cent were attributed to CNG vehicles. OEMs are actively promoting CNG vehicles, and the industry as a whole is working towards the development and promotion of CNG. Various schemes for conversion and bulk purchases are being provided to promote the widespread adoption of CNG vehicles in the markets. These initiatives are expected to further boost the volume of gas consumption within the CGD sector. In terms of volume, the current mix stands at approximately 50-60 per cent CNG and 40-50 per cent PNG. However, this mix mildly fluctuates every quarter.
ATGL’s journey so far
ATGL is focused on converting more consumers to PNG and CNG. On a standalone basis, ATGL has been authorised for 33 GAs, as of the 11th CGD bidding round. The company also received authorisations for 19 GAs in its JV with IOAGPL. With a total of 52 GAs within its ambit, ATGL has established its presence in 124 districts across India. Once the infrastructure in these GAs is in place, the company will serve nearly 15 per cent of the population. As of September 2023, ATGL has 483 operational CNG stations. The company also has 0.9 million domestic connections and services more than 8,500 commercial and industrial consumers. During the April-September period of 2023-24, ATGL registered a 19 per cent year-on-year increase in CNG sales, attributed to a reduction in CNG prices and expansion of the network. Infrastructure development is under way for all GAs authorised to ATGL under rounds 9 and 10 of CGD bidding. In the GAs authorised to the company in round 11, work is under way for the development of city gate stations and CNG stations. Adhering to its philosophy, the company is focusing on the early development of the gas ecosystem and prompt monetisation of the authorised GAs.
ATGL is keen on exploring other opportunities, including e-mobility, waste-to-energy plants and LNG stations. To this end, new companies have been incorporated under the ATGL parent company, namely, Adani TotalEnergies E-mobility Limited (ATEL) and Adani TotalEnergies Biomass Limited (ATBL). In the first half of 2023-24, 221 EV charging points have been commissioned across 64 locations. Further, ATEL has partnered with various players to develop and install EV charging facilities at various locations across India. Meanwhile, ATGL has won a tender to design, build, finance and operate a 500 tonne per day Municipal Solid Waste-based Bio-CNG plant in Ahmedabad. ATBL is also in the process of building one of India’s largest CBG plants in Barsana, Uttar Pradesh. The construction for this endeavour is in full swing and Phase I is expected to be commissioned by March 2024.
“ATGL plans to invest nearly Rs 150 billionRs 200 billion over the next seven to eight years. The company is poised for multifold growth with establishment of a CNG station network and PNG
connections.”
In addition, as a part of its strategy to expand into adjacent businesses, ATGL is focused on expanding its footprint in LNG retailing for transport and mining sectors. The company has already identified land for LNG stations, and construction work has been awarded. Another key business area being explored by ATGL is smart metering. In this regard, ATGL has invested in Smart Meters Technology Private Limited, where the company holds a 50 per cent stake, and the remaining portion is owned by GSEC Limited. ATGL expects the launch of its affordable state-of-the-art smart meters in India by March 2024.
Technology and innovations
CGD operates on a business-to-consumer concept. In order to ensure that businesses run efficiently and effectively, technology adoption is a must. The uptake of digital innovations has transitioned from being an option to becoming a necessity. ATGL has progressively embraced digitalisation and developed the SOUL platform, aiming for the standardisation and automation of multiple operations across the company. It is a one-of-its-kind initiative that facilitates the transition from applications to a digital business platform, catering to all aspects of ATGL’s CGD, EV and biomass businesses. Integrating all businesses with SOUL will lead to transformational efficiencies, helping to enhance business key performance indicators and optimise costs. SOUL functions as an integrated business operations platform centre for monitoring the entire CGD network through supervisory control and data acquisition. It is a real-time monitoring platform that tracks gas usage, unaccounted gas, meter purchases, driver management system, vehicle tracking system, etc. ATGL operates on the ideology that digital deployment is imperative to enhance customer delight. In an effort to ensure this, ATGL has revamped the My Adani Gas app, which helps consumers perform various activities on their mobile devices and desktops, which enhances customer experience. Apart from this, ATGL recently launched a project journey mapping system as well.
Future outlook
ATGL plans to invest nearly Rs 150 billion-Rs 200 billion over the next seven to eight years. The company is poised for multifold growth with the establishment of stations and PNG connections. It strives to build infrastructure ahead of demand. At present, in many GAs, development is already well ahead of the minimum work programme targets. ATGL also plans to strengthen its dealer-owned-dealer-operated and company-owned-dealer-operated stations.
Going forward, to ensure holistic and streamlined growth, the government should formulate regulations that will serve as a framework for the development of CGD infrastructure. Despite having substantial government support, the sector faces challenges such as high permission charges and delayed approvals. It is essential to establish regulations that clearly define permission charges, time and the role of state governments, state authorities and the central government. This will help facilitate the establishment of the natural gas ecosystem. The massive infrastructure development will provide a huge impetus and help increase the share of natural gas to 15 per cent.
