The city gas distribution (CGD) volumes witnessed a significant improvement in the second quarter of financial year (FY) 2021. The recovery has been evident from October and November 2020. Both the compressed natural gas (CNG) and piped natural gas (PNG) have shown strong signs of recovery. Further, the CGD sector is expected to grow exponentially in the next few years, with the government’s visionary target of increasing the share of natural gas in the country’s energy basket from the current level of ~6.2 per cent to 15 per cent by the year 2030. GAIL Gas Limited is currently operating in 14 geographical areas (GAs) consisting of 52 cities and towns, which are spread across the country.
In an exclusive interview with CGDIndia, Mr. M. V. Ravi Someswarudu, Chief Executive Officer, GAIL Gas Limited spoke extensively about the Company’s existing operations, network expansion plans, impact of COVID-19, recently adopted technological advancements, the challenges faced by the company and the future outlook…
What has been the impact of COVID-19 on volumes and operations in general?
GAIL Gas Limited’s CNG sales witnessed a fall of around 87 per cent, whereas the industrial and commercial PNG sales dipped around 75 per cent during the Covid-induced lockdown last year in the country. However, pre-Covid level volumes have been achieved across all segments since the third quarter of the financial year 2020-21.
As far as operations are concerned, the pandemic posed many challenges but also presented the company with various opportunities. The period also created a positive awareness as-well-as demand for PNG Supplies, due to its inherent nature of Un-interrupted & touch-less supplies. During this period digitalisation was promoted and various other innovations took place that will help the company to operate more efficiently in the future. Further, the company utilised the Covid-19 lockdown period to adopt new technologies to simplify and streamline processes and further improve its customer experience with automated billing processes, e-invoicing and invoice reminder functionalities.
What are GAIL Gas’s infrastructure development plans for the coming years?
The company will be working extensively towards CGD infrastructure development in the coming years, mainly due to the immense government support being extended to CGD companies. During the FY 2020-21, the company has issued letters of intents (LOI) for setting-up of around 115 CNG Station across its GAs for development of CNG Stations on various models (namely DODO, Full DODO & MRU). The virtual pipeline is also becoming a reality due to which the company has an opportunity to develop infrastructure to transport natural gas to remote locations. GAIL Gas is setting up its first LNG/LCNG station in Mandideep Industrial area (near Bhopal) which is likely to be commissioned by July 2021. Further, around six more liquefied natural gas (LNG) stations are expected to be set up across the Golden Quadrilateral to enable use of LNG in transport sector. GAIL Gas is planning to add 300 CNG stations and around 500,000 additional domestic-PNG connections in the next 5 years.
In which areas has GAIL Gas witnessed highest growth so far and where does the most growth opportunity lie in the future?
GAIL Gas is currently operating in 14 GAs and areas that have been the key growth drivers include established markets such as Meerut, Sonipat and Bengaluru GAs. In the coming years, Eastern and Southern India are expected to become vital demand centres for the CGD sector as these regions constitute a large market that is still untapped and are being rapidly connected to the gas pipeline network. Karnataka is one such state that offers tremendous scope to CGD companies to establish an ecosystem for promoting natural gas as the current natural gas utilisation in the state stands at a paltry 1 per cent compared to national average of appx. 6.2 per cent. CNG, being eco-friendly as well as economical, is emerging as preferred fuel in Tier-1/ Tier-2 cities due to high prices of alternate liquid fuels. Further, due to inherent advantages of PNG, commercial as well as domestic sectors are expected to have exponential growth.
How does GAIL Gas monitor construction activities in its GAs?
The project office monitors construction activities by collecting data from multiple sources and manages the project supply chain. The project consultants provide periodic progress reports through the electronic media and the company is able to monitor construction activities on real time basis. Each GA has an EPMC consultant besides GAIL Gas team which is supervising quality control during construction activities. Further, each GA has a supervisor who updates the database enabling efficient monitoring of construction activities. Physical progress is usually monitored by holding review meetings with project contractors and consultants working on the field.
What are the various challenges being faced by the CGD sector and how does GAIL Gas view the future outlook?
CGD entities face various challenges such as issues with obtaining equipment owing to substantial price hikes, delays in obtaining permissions from government authorities and rise of competing fuels and electronic vehicles. Despite the rise of electronic vehicles, it is expected that CNG vehicles would be able to co-exist as the motor vehicle segment remains largely untapped and has a plethora of opportunities for all types of sustainable fuels.
Going forward, the company’s outlook for the CGD sector remains optimistic as it expects a growth of more than 10 per cent in FY 2021-22 due to favourable government policies and the expansion of CGD entities. Further, the CNG segment is expected to grow exponentially in the coming years as natural gas is expected to be brought under the ambit of goods and services tax. This will lead to ease and uniformity in operations throughout the country.