Incorporated in 2008 for the smooth implementation of city gas distribution (CGD), GAIL Gas Limited has been a key player in the distribution and marketing of natural gas. With a strong commitment to customer care and value creation, GAIL Gas has grown in size and stature. With a modest start with four geographical areas (GAs) in 2009, today GAIL Gas is authorised to implement the CGD project in 16 geographical areas (GAs), two of which are won in the recently concluded 11th and 11-A bidding round. GAIL Gas along with its joint venture companies (JVCs) cover 208,162 sq. km of the area.
Currently, GAIL Gas along with its JVCs has its presence in 25 GAs across 14 states.
What is the current status in terms of network, stations, etc.?
With a focused approach to expanding the Green Energy footprints in the country, GAIL Gas is pursuing CGD business in Andhra Pradesh, Karnataka, Rajasthan, Vadodara (Gujarat), Haridwar (Uttarakhand), North Goa, and Assam through its Joint Ventures.
The company has formed joint venture ‘RSGL’ with Government of Rajasthan to implement CGD projects in the GAs of Kota and Gwalior (except areas already authorised) and Sheopur districts.
Similarly, the company has tied up with Government of Andhra Pradesh and Vadodara Mahanagar Sewa Sadan for the implementation of the CGD Project in GAs of East Godavari and West Godavari districts and Vadodara district, respectively.
GAIL Gas has also joined hands with Bharat Petroleum Corporation Limited (BPCL) for CGD projects in Haridwar district in Uttarakhand and North Goa district in Goa with BPCL. To further reach to north eastern state, JV with Oil India Limited and Assam Gas Company Limited is formed to implement CGD Project in GAs of Kamrup and Kamrup metropolitan districts and Cachar, Hailakandi and Karimganj districts.
GAIL Gas along with its JVCs has connected around 0.77 million kitchen, more than 3,790 industrial and commercial connections and has set up 342 compressed natural gas (CNG) stations in various modes i.e., online, daughter booster, and mother stations.
As far as the network is concerned, an extensive CGD network of around 11,000 km is created by GAIL Gas and its JVCs. We have digitalised many of our services being offered to piped natural gas (PNG) customers. Automation of many other activities such as metering, and change in price at CNG stations is in progress. This will help us with reduced manual intervention in carrying out our day-to-day activities and increased customer satisfaction.
What is the current break-up of different segments, that is, PNG versus CNG and domestic versus commercial versus industrial, for GAIL Gas?
GAIL Gas is catering to all four segments of the CGD industry i.e., industrial, commercial, CNG, and domestic segments in its authorised GAs. If we look at the percentage contribution of the different sectors, unlike other CGD entities, where CNG volume gets the majority of share of gas consumption, GAIL Gas is well placed with its highest gas consumption coming from the industrial and commercial segment which is followed by CNG and domestic segment.
What are the challenges for GAIL Gas in terms of network expansion? How are they being addressed?
For creating CGD infrastructure like laying pipelines, permissions from various authorities are required. These permissions take substantial time which again adds to the cost of the project besides exorbitant charges being levied by these land holding agencies which differ from one agency to another. Most of the time, it is felt that there is a lack of coordination between these agencies and also there is no standardisation of charges being levied to CGD entities seeking permission for the laying of the pipeline.
GAIL Gas takes proactive measures and permission from various land holding authorities is applied well in advance after doing a route survey and assessing anchor load demand in the area. Details required for processing the request for permission are provided without delay.
On the other hand, GAIL Gas has been requesting for standardisation of permission charges at various forums for CGD. Issues related to delay in permission are also being taken up with the Federation of Indian Petroleum Industry which has been designated as the Nodal Agency for all CGD entities to take up the various permissions related issues with concerned State governments /departments through the Ministry of Petroleum and Natural Gas.
What have been the challenges in terms of gas availability on the supply side?
The supply of natural gas in most of the GAs is being done through connectivity with the nearest natural gas transmission pipeline. GAIL Gas has been successfully supplying PNG and CNG to its customers with connectivity from GAIL’s Transmission pipelines. There are few GAs where GAIL Gas has started supplying gas by sourcing liquified natural gas (LNG) and coal bed methane as well.
However, if we look at the PAN India scenario, domestic-PNG (DPNG) connections have increased from 2.5 million to 9.3 million, and CNG stations have increased from 947 to 4,433 from March 2014 to March 2022. Currently, the demand for the PNG (domestic) segment and CNG (transport) segment is being met by domestic gas allocated to CGD entities. However, a fall in domestic gas production coupled with increased demand for natural gas in the Indian market has made LNG import significant to meet the energy requirement.
Going forward, as India aims to achieve a 15 per cent share of natural gas in primary energy mix by 2030, gas consumption will have to reach 590 mmscmd. domestic production coupled with LNG Import and CBG production will be able to cater to 380 to 400 mmscmd. However, for meeting additional demand, various interventions including additional supply sources and infrastructure would be required.
What is the expected CAPEX and what will be the growth in terms of CNG stations or PNG connections by 2022-23?
GAIL Gas has invested around Rs 34 billion as capex in its GAs and is expeditiously implementing the CGD project. GAIL Gas plans to set up around 150 CNG stations and more than 0.15 million DPNG connections in the current financial year 2022-23. To meet the targets set for the current financial year, we plan to invest another Rs 10 billion in financial year 2022-23.
What impact does GAIL Gas see, if any, of the green hydrogen policy?
India is one of the fastest-growing energy consumers in the world. With the growing population and urbanisation, there will be a need for clean and affordable energy. Currently, the share of natural gas in India’s primary energy basket is 6.7 per cent which Government. has targeted to increase to 15 per cent by 2030.
The National Hydrogen Mission by the Government of India is a visionary step for securing India’s fuel energy needs and meeting future demand for energy in the transportation, industry, and other sectors.
Blending hydrogen with PNG / CNG will not have any negative impact on the growth of CGD companies. Government. plans to blend 15 per cent of hydrogen with PNG for domestic, industrial, and commercial consumption and around 18 per cent-20 per cent for CNG. This will make more domestic gas available for the CNG (transport) and PNG (domestic) segments helping in the further expansion of CGD projects in authorised GAs.
Is GAIL Gas more optimistic or less optimistic about the CGD sector than it was a year ago?
In the past 3-4 years, the CGD sector has seen unprecedented growth in terms of the number of awarded GAs, DPNG connections, CNG stations, and gas sales volume. Around 120 million. DPNG connections and more than 17,000 CNG stations are expected to be achieved by CGD entities in the next 8 years. Further, the performance of all CGD entities was affected by Covid-19 in the last two years due to the unavailability of manpower and delay in permissions from various authorities. Disruption in the supply chain of original equipment manufacturers also affected the supply of equipment like compressors, dispensers, cascades, meters, regulators, etc. which are essential for any CGD company to expand its operation.
GAIL Gas has also done exceedingly well and has clocked the highest ever revenue of Rs 68.53 billion and profit after tax of Rs 2.83 billion in financial year 2021-22 which is a significant jump of 71 per cent and 79 per cent respectively from the previous year. Further, GAIL Gas along with its JVCs has set up 15 per cent more CNG stations in financial year 2021-22 taking the count of total CNG stations to 342.
With the opening up of the economy after the Covid-19, most of the CGD entities are already operating at the pre-Covid level and GAIL Gas is committed to performing better in coming years.