The city gas distribution (CGD) sector has been severely impacted due to the outbreak of Covid-19 pandemic. While the CGD operators faced a no. of challenges due to the pandemic and also missed their targets set, they have been able to bounce back to the pre-Covid levels owing to their concerted efforts.

In an exclusive interview with CGDIndia, Dilip Kumar Pattanaik, Executive Director, Hindustan Petroleum Corporation Limited (HPCL), shares his perspective on HPCL’s current CGD network, impact of Covid-19, issues faced, future plans and way forward for the CGD sector.

What is the current status of network development in the geographical areas (GAs) that have been authorised to HPCL?

HPCL has successfully secured authorisation in 10 GAs in the 9th and 10th rounds of CGD bidding. Due to pandemic and subsequent lockdown, the site work was hampered for three to four months. However, HPCL was able to commission and operate 25 compressed natural gas (CNG) stations in the authorised GAs, as on date. Moreover, HPCL along with its four joint ventures are operating 206 CNG stations. As of December 2020, HPCL is operating a total of 620 CNG stations in its retail outlet (petrol pumps) across India.

What are HPCL’s capex plans for the CGD sector for the next 2-3 years?

HPCL is having a CGD capex plan of Rs 25 billion for next 2-3 years. Majority of it will come from infrastructure development that is pipeline, CNG stations and domestic piped natural gas (PNG) connections.

How was the performance of HPCL’s CGD business during the first half of the current financial year (April-September 2020) in terms of revenue generation (PNG and CNG sales) and commissioning of CNG stations, 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 almost 4-5 months. We can still feel the impact of lockdown on supply items as the vendors are in pressure of delivering items on time. However in these tough times, we were able to commission 25 CNG stations, as on date, 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?

Pandemic and subsequent lockdown has resulted in complete work halt for 4-5 months. We utilised the same in planning and revising our action plans. In spite of 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 developments, we can expect investment of over Rs 90 billion in next 8-10 years for these 10 GAs.

Do you have any plans with respect to using small-scale liquefied natural gas (SSLNG) for CNG and PNG supply? If yes, what are the upcoming projects and investments in this space?

HPCL have been awarded four GAs in the state of West Bengal which are proposed to be fed by GAIL pipeline. This pipeline is expected to reach the GA early next year. Since the authorised GAs have huge untapped potential, we at HPCL are exploring the possibility of feeding PNG and CNG through SSLNG. Apart from achieving the targets, SSLNG would assist us in early monetisation and seeding the gas market in these areas.

What are the future technologies that your organisation will be considering for deployment in the post-Covid world for automating CGD business?

With social distancing being the current norm, HPCL has been taking various steps to mitigate the interaction through use of automated technologies. Currently, we are exploring technologies, such as smart networks and mobile refueling unit, which would provide a seamless and intuitive experience to the consumers without any physical interaction.

What is the short term and medium term outlook for the CGD sector?

After the 9th and 10th rounds, a total 402 districts covering 70 per cent of India’s population have been covered by CGD network. It is understood that the Petroleum and Natural Gas Regulatory Board is actively considering 11th round of CGD bidding. The government has also plans for opening up of markets where marketing exclusivity has ended and unified pipeline tariff implementation is also in advance stage. These government initiatives will attract major investments in CGD Sector in the country and therefore, the outlook of this sector seems quite bright.