The Government of India has set an ambitious target of taking the share of natural gas in the country’s energy mix from the current level of 6.7 per cent to 15 per cent by the year 2030. In order to achieve this target, the city gas distribution (CGD) segment is expected to play a vital role as it has an opportunity to serve a large untapped market. The CGD segment was adversely impacted by the Covid-19 pandemic due to which key CGD players recorded a sharp decline in volumes. However, with the gradual ease in restrictions, CGD entities are slowly returning to pre-Covid levels of operations.
Key stakeholders in the CGD segment are now also looking forward to collaborate with other utilities, especially electricity distribution companies in order to accelerate growth for both segments by leveraging advanced technological tools and consumer data.
At the recent webinar on collaboration between city gas distribution and electricity distribution companies to accelerate transition to gas-based economy organised by India City Gas Distribution Forum, Tarun Kapoor, Secretary, Ministry of Petroleum and Natural Gas (MoPNG) shared his views about the scope of CGD segment’s collaboration with electricity distribution companies, increased consumer satisfaction due to establishment of a single platform for different utilities and increased efficiency in the operations of the CGD and electricity distribution companies. Excerpts…
Need for collaboration between CGD and electricity distribution companies
Over the past few years, the power sector has become information technology driven and has also introduced greater degree of automation in its operations. The CGD segment is currently in a budding stage as key entities are in the process of laying infrastructure. Further, in the domestic segment, the CGD sector has currently only established 7.9 million connections as against the target of 500 million connections. Hence, the CGD sector has tremendous scope and collaboration with a well-established sector like power at such a juncture could give much needed impetus to its growth trajectory.
Consumers always look for convenience and lower prices when it comes to utilities. A collaboration between CGD and electricity distribution companies will ensure better service to consumers and boost the competitive landscape as it will enable entities in both sectors to ensure better pricing and efficiency in operations. Currently, consumers have to deal with various agencies for different utilities and are often unable to keep track of their monthly consumption. With the collaboration of CGD and electricity distribution companies, consumers can have a single billing platform for various utilities which will enable them to keep track of their consumption and make timely payments.
A collaboration between CGD and electricity distribution companies also creates various business opportunities as third-party agencies can be roped in to create an interface between the two sectors. Since, these agencies possess expertise in a particular field, they can help entities to increase efficiency in their overall operations.
The water utility segment is plagued with inefficiencies in the billing process due to which water bills in various Indian cities are generated once every three months. This leads to water utilities having to invest working capital at regular intervals. Hence, introduction of third-party agencies can help utilities in ensuring regular payments from consumers and provide financial stability to water utilities.
Earlier, electricity distribution companies used to have their own employees take meter readings which led to various delays in the whole billing process. However, of late companies in the power sector have started outsourcing the billing operations to third-party agencies due to which the entire billing process has picked up pace and companies have reported a sharp decline in arrears. Similarly, the introduction of third-party agencies in collaborations between the CGD and power sectors will help entities in ensuring efficient billing process and enable them to focus more on their core operations.
The road ahead
The collaboration between CGD and electricity distribution companies have been tested through various pilot projects. A collaboration between Indraprastha Gas Limited and TATA Power in Delhi was established which proved to be beneficial for both the consumers as well as the entities. Meanwhile, a similar collaboration was carried out between GAIL and TATA Power in Odisha. Going forward, there is a need to introduce more such pilot projects to ensure viability of collaborations between the CGD and power sectors.
Further, more entities from different utilities should venture into collaborations with CGD entities in order to ensure increased efficiency in operations and leverage the technical expertise and market share of one another.
Mr Tarun Kapoor is Secretary to the Government of India in the MoPNG. He is a member of the Indian Administrative service with over 33 years’ experience at the state and national level. Before taking over as Secretary, MoPNG, Mr Tarun Kapoor was posted as Vice Chairman, DDA. He has worked as Additional Chief Secretary in Government of Himachal Pradesh looking after various departments from time to time like Power, Environment and Forests, Food and Civil Supplies, Excise, PWD etc. He has also worked as Joint Secretary in the Ministry of New and Renewable Energy looking after National Solar Mission for five years. He also worked in Satluj Jal Vidyut Nigam Ltd, a CPSE in the area of hydro power.