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CGD in India

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Current Scenario & Way Forward

P.K Pandey
VP (Marketing)- IGL
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ENERGY SCENARIO
IN INDIA

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Natural Gas

Natural Gas is considered an ACE fuel

A Affordable fuel

NATURAL
GAS c Clean fuel

E Efficient fuel

Investment in Natural Gas is an
investment towards clean environment
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Energy holds key to India’s Growth

 India’s GDP and primary energy
Energy demand are strongly linked.
 Share of Natural Gas has remained
almost stable in India’s primary
Mix energy consumption which is ~ 7-8%
as against global average of 24%

India is
3rd
Nuclear,
Largest
Hydro Energy Consumer
1% Electric,
Oil, 26% 4% Fuel
Coal Oil NG
Share
Coal, 58% India 58% 26% 8%
World 29% 32% 24%
Natural Source - bp-statistical-review-of-world-energy-2016
Gas, 8%
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we have to increasingly meet energy needs with renewables and natural gas.bp.com/en_in/india/point-of-view/Moving_India_to_a_gas_based_economy. Considering the aim to curb the country’s carbon emissions intensity by up to 35% from 2005 levels by 2030.html 5 . Availability. Energy holds key to India’s Growth The world is fast moving towards gas as its primary energy source and this growth is rising due to 4 key value propositions that the Natural Gas offer : Abundance. Gas Based Economy # Gas4India Source : http://www. Increase gas in the energy mix for India from the current level to close to global level by 2030. Affordability & Acceptability as it has a cleaner footprint than coal or liquid fuels.

Natural Gas Demand Outlook As per the projection of demand as made by the working group on Petroleum and Natural Gas Sector for the 12th five year plan (2012-17). it is envisaged that – Demand for Natural Demand for Natural Gas in CGD Segment Gas shall reach to 523 would also reach to 50 MMSCMD by the end MMSCMD by end of FY of FY 2018-19 2018-19 Source – MoP&NG Annual Report 2015-16 Natural gas at 25% of energy mix in 2030 is 970 mmscmd of gas consumption – this is a 7 fold growth over the next 14-15 years.bp.html 6 .com/en_in/india/point-of-view/Moving_India_to_a_gas_based_economy. Source : http://www.

Natural Gas Demand Outlook What does it entail? To meet this level of demand there has to be an optimal combination of domestic natural gas and imported LNG. • Expanding Gas Supply & Initiatives Distribution to be Infrastructure • Augmenting Natural Gas taken Supply • Policy Interventions 7 .

Natural Gas Supply Network Ministry is facilitating in increasing the Natural Gas supply network Pipeline Network. along the highways Increasing capacity of existing RLNG terminals and Planning new RLNG terminals 8 8 . Out of the proposed 15.000 km gas  Expand network of CNG pipeline. CNG & PNG Expansion  Expand Piped Natural Gas Increasing Pipeline Network (PNG) network in a Mission • Existing : 15000 km mode by connecting 1Crore • Proposed : 15000 km households in 5 years.000 km has stations already been authorized & these  Developing CNG corridors projects are at various stages of implementation. about 13. RLNG Terminals.

CITY GAS DISTRIBUTION IN INDIA: CURRENT SCENARIO 9 .

Commercials &Industrial units 10 .City Gas Distribution in India City Gas Distribution is a fast emerging industry catering natural gas to Automobiles. Households.

2016 ~31 no.27 million households ~Gas sales around 16 mmscmd MGL Gail Gas BGL CUGL GGL IGL MNGL TNGCL 11 11 .CGD 7 new GAs announced by PNGRB in Round 8 bidding . of companies operating in more than 78 Geographical Areas ~1094 CNG stations ~3. Natural Gas Supply Network .

The number of agglomerations (smart cities) will rise. Natural Gas Supply Network .CGD Already covered 89 Geographical Areas in 7 Rounds of CGD bidding. Another 7 Geographical areas in Round 8 CGD Bidding have been covered Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 Round 8 • 6 GAs • 6 GAs • 7 GAs • 14 GAs • 19 GAs • 34 GAs • 5 GAs • 7 GAs (2009) (2009) (2010) (2013) (2015) (2015) (2016) The socio-economic changes are expected to lead changes in the mobility patterns and urbanization. Such evolutions will accelerate the development of City Gas Distribution network (CGD) 12 .

continue to face stiff competition from alternative liquid fuels.CGD Natural Gas sale is primarily used as a replacement of alternate fuels in different segments . to ensure competitiveness. Natural Gas Supply . 13 . Selling Price of Natural Gas is largely governed by the pricing of alternate fuels New Government Policies Highest priority to City Gas Allocation of 100% Domestic Distribution for catering to Gas to meet entire transport & transport domestic households PNG Domestic gas requirement will provide a big boost to CGD sustainability PNG Supplies to Industrial & Commercial segments however.Therefore.

Infrastructure and Policies Priority in Land Uniform tax allocations for Normalization of structure setting up CNG Road Restoration stations Single Window Review of CGD LPG Free zones Clearance Bidding Criteria Mandate for CNG conversions 14 .Policy Interventions to tackle impediments Volume in CGD Business is an aggregate of small customers and Gas volume ramp up happens over the period of time .CGD business revolves around Gas supplies.

Natural Gas Customers– CGD PNG CNG (Households) (Transport) Commercials Industries 15 .

CGD Network Layout 16 .

3 – 4 Bar Domestic Customers 0. Operating Pipeline pressure Operating Location Pressure Steel Pipeline Network catering to CNG 19-26 Bar station MDPE Network 4 Bar Industrial & Commercial Customers 0.021 Bar 17 17 17 .

CNG Network Layout STEEL PIPELINE – NATURAL GAS CARRIER Mother station Online station Booster Daughter booster station 18 18 .

REGULATORY SCENARIO IN INDIA 19 .

petroleum products and natural gas Basic Objectives of the PNGRB Act–  To protect the interest of consumers and entities  To provide level playing field  To promote competitive markets . 2006 on 1st October 2007 Regulator for downstream activities relating to petroleum. Regulatory Scenario in India PNGRB was constituted under The Petroleum and Natural Gas Regulatory Board Act.Fostering fair trade & competition amongst entities 20 .

Marketing And Sale Of Petroleum. PNGRB Act. Storage. Processing. 2006 PNGRB formed with an objective to: Regulate Refining. and equitable distribution Monitor prices & take corrective actions Maintain databank of information Lay down technical standards / specifications Perform other functions entrusted by Central Government 21 . Distribution. Petroleum Products and Natural Gas Protect consumer interest Register & Authorise entities Declare pipeline as common / contract carrier Regulate access on common/contract carrier/CGD network Enforce retail & marketting service obligation Ensure adequate availability. Transportation.

Notified Regulations To ensure arm’s length transaction To Grant Authorization to existing & between the transmission and new entities marketing arms of the same holding Authorization company [CGD & NG] Exclusivity Affiliate code Regulation [CGD] Of conduct To Grant Infrastructure & Marketing exclusivity to authorized CGD entities To determine Transportation Regulations Tariff & NG pipeline tariff Tariff Access code Determination Regulations [CGD & NG] Technical stds & specifications To ensure fair access to including safety std pipelines to all shippers To define levels of technical and safety [CGD & NG] standards (CGD and NG) and ensure compliance of the same 22 .

Key features of CGD regulations Type of Regulation Key features Authorization  Inviting. Exclusivity  Infrastructure – 25 years. 18. 17 & Reg. rollover in blocks of 10 years possible  Purview of common carrier or contract carrier  3 years to entities operating for more than 3 years before the appointed day  5 years to entities operating for less than 3 years before the appointed day Code of Practice for  Setting & Monitoring Quality of Service standards for Quality of Service Authorized Entities Technical Standards  Design. Evaluating. Authorizing & Monitoring successful bidder for new areas  Authorizing Existing Entities under Reg. Installation & Safety Specifications  Operating & Maintenance Standards Access Code  Guidelines to provide access to CGD networks (common carrier) 23 .

Bid Evaluation Criteria Evaluation Criteria Old New Network Tariff 40% 70% Compression Charge 10% 30% PNG Domestic  Connections 30% MWP Inch Km  20% MWP 24 .

CITY GAS DISTRIBUTION IN INDIA: WAY FORWARD 25 .

8% from 242. CGD Infrastructure in India – Future Outlook As per “Vision 2030.6 mmscmd (in 2012-13) to 746 mmscmd (in 2029-30) The contribution to the overall demand from the CGD sector is set to increase from 6% to 11% during the projected period (81 MMSCMD approximately) 26 . it is envisaged that Share of natural gas in the energy mix of India would increase to 20% in 2025 and 30% in 2030. Natural Gas Infrastructure in India: Report by Industry Group for Petroleum & Natural Gas Regulatory Board”. Natural gas demand would grow significantly at a CAGR of 6.

CGD Infrastructure in India – Future Outlook Key drivers for City Gas Distribution Well laid out Gas Adequate supply Availability and Infrastructure of Supply of Gas at transmission competitive pipelines pricing Rationalisation of Enabling policies alternate fuel and Regulatory prices and framework subsidy removal 27 .

CGD Infrastructure in India – Future Outlook India currently hosts ~15000 km of pipeline infrastructure with a capacity of more than 300 MMSCMD Expansion of City Gas Distribution. which has a strong linkage to pipeline infrastructure. would also get a boost up 28 .

CGD Infrastructure in India – Future Outlook Gas Availability at Competitive Price Natural Gas sale is primarily used as a replacement of alternate fuels in different segments Therefore. to ensure competitiveness. Selling Price of Natural Gas is largely governed by the pricing of SUBSIDISED alternate fuels Government Policy to allocate 100% Domestic Gas to meet entire CNG and PNG Domestic gas requirement will provide a big boost to CGD sustainability 29 .

Green Corridor Along National Highways Government has advised leading CGD companies to construct CNG stations along the major National Highways from Delhi.Chandigarh NH-2 Delhi-Agra NH-8 Delhi .Rohtak NH 24 Delhi-Moradabad NH 58 Delhi-Meerut NH 91 Delhi. This will boost the intercity moment of vehicles with the Green Fuel.Jaipur NH 10 Delhi . Location NH 1 Delhi .Aligarh 30 .

CGD Infrastructure in India – Opportunities Snapshot of Indian Road Transport Sector Vehicular population growth (2001-2011) and composition (2011) Source: Road Transport Yearbook. Ministry of Road Transport & Highways. 2010-11 • India is still pegged at low • The dependency on petrol and vehicular penetration of around diesel is still around 96% 117 vehicles per 1000 • Potential of converting 2 Wheelers persons into CNG mode 31 .

CGD Infrastructure in India – Opportunities LNG to CNG .LNG Alike many countries of Europe and America. new technologies be introduced for NGVs in India also – LNG in Heavy Duty Vehicles (Trucks).Railway locomotives and Buses LNG to CNG o Apart from being eco friendly. LNG filling provides more storage capacity makes intercity movement hassle free LNG to LNG o This set up also provides access to areas where gas transmission pipelines are not available 32 .

CGD Infrastructure in India – Opportunities The Ministry has also recently given the highest priority for gas allocation to CNG and PNG for domestic households. This would boost the demand for NG in this segment Tie up with vehicle Manufacturers Tie up with OEMs for Gas based equipments Tie up with OMC and fleet owners Tie up with Builders for PNG Domestic connections Strategic Alliances Skill Development for Manpower 33 .

34 .products in vogue in foreign markets are sought to be plugged straight into the Indian market • Long lead times • High Costs In case of PNG also there is a need to develop more vendors for Domestic Meters and Regulators which would benefit in reducing lead time and bringing down the cost of equipment.CGD Infrastructure in India – Opportunities Expansion of local vendor base One of the critical areas for improvement is to deepen and strengthen the vendor base. low inventories etc. as the CGD industry today has very few local vendors that results into – • High Imports . better service support.

• GIS mapping of pipelines • RFID (Radio Frequency Identification) tags for CNG cylinders to check validity of cylinder hydro testing Certificate 35 . remote price change in CNG Dispensers. etc.CGD Infrastructure in India – Opportunities Automation of Processes • Use of AMR (Automated Meter Reading) • Use of SCADA for monitoring CGD Network.

Presently FCRI is the sole Govt.CGD Infrastructure in India – Opportunities Capacity Development • Thrust on increasing the number of testing facilities for CNG Cylinders* • More Authorised CNG kit fitment workshops are required to be set up • Opening of more Dispenser Calibration facilities in India. approved agency for this purpose *In 330 working days around 1000 cylinders would be required to be tested per day 36 .

Way Forward Government Support Domestic Gas Availability for CGD at affordable Price Rationalization of Taxes Priority in Land Allocation for CNG Stations at prominent locations Single Window Clearances Introduction of CNG operated two wheelers and trucks in India Introduction of LNG/LCNG concept for refuelling 37 .

CHALLENGES IN CITY GAS DISTRIBUTION IN INDIA 38 .

CGD Infrastructure in India – Challenges Volume in CGD Business is an aggregate of many small customers and Gas volume ramp up happens over the period of time There are large intra-day and seasonal demand variations – however. Gas network is designed for peak volumes 39 .

LPG 40 .CGD Infrastructure in India – Challenges Gas Sourcing and Economics  Gas sourcing needs to be at the best 1 price to remain competitive with alternate competing fuels  Demand Fluctuation  Non uniform of tax structure •CNG Vs Diesel •Domestic PNG Vs Domestic LPG •Industrial PNG Vs Furnace Oil •Commercial PNG Vs Diesel /Comm.

permissions / NOCs  Exorbitant Road Restoration  Limited agencies for CNG cylinder testing  Third Party Damages 41 .CGD Infrastructure in India – Challenges Infrastructre  Scarcity of Land for setting up CNG 2 stations  Development of CGD networks require continuous liasoning with various authorities .

CGD Infrastructure in India – Challenges Others 3 • Evolving Regulatory Scenario • Shortage of Skilled Manpower • Vendor Development • Spurious Kits and cylinders threaten safety 42 .

The Gas cylinder rules thus impress upon a CGD entity requirement to check for the fitness status of Vehicle Onboard CNG cylinders to ensure this. a compliance plate is required to be placed on the vehicle. It has all the relevant details for the filler to inspect before dispensing 43 . Challenges – Hydro testing of CNG Cylinders As per Gas Cylinder Rules 2004 • Statutory requirement of periodic inspection and testing of High Pressure Gas Cylinders • Chapter IV Clause 35 Quote “no person shall fill any cylinder with any Compressed gas unless the cylinder has been examined and subjected to hydrostatic test or hydrostatic stretch test” Unquote.

THANKS SCENE 44 .