Indraprastha Gas Ltd’s (IGL) entry into retail gas distribution in Ghaziabad is subject to the government agreeing to its request for a share of subsidized natural gas.
“IGL has asked for this allocation (0.2 million standard cubic metres per day) as the Ghaziabad Development Authority has cleared its proposal for land allotment for setting up compressed natural gas (CNG) stations,” said a senior petroleum and natural gas ministry official who did not wish to be identified.
Indraprastha Gas is a joint venture between GAIL (India) Ltd, Bharat Petroleum Corp. Ltd and the Delhi Government.
City gas distribution companies want a share of subsidized natural gas, which is delivered under the administered price mechanism, since even after taking into account the delivery cost, it is still cheaper than the $4.20 (Rs167) price formula that the government recently approved for gas to be produced by Reliance Industries Ltd from its fields in the Krishna-Godavari basin.
Of the 90 million standard cubic metres per day (mscmd) of gas available in the country, around 53mscmd is available at the administered price. The government’s plan involves raising the gas price from the current $1.90-2.50 per mBtu.
Indraprastha Gas plans to expand its gas retail network to other locations in the National Capital Region, such as Greater Noida and Gurgaon, to cater to domestic, commercial and industrial sectors.
GAIL supplies Indrprastha Gas a total of 2.7mscmd of administered-price gas which is used to supply piped natural gas and CNG to consumers.
“We are hopeful that we will get this additional allocation of this gas. We also plan to start Greater Noida operations by December this year,” said Om Narayan, managing director of Indraprastha Gas.
The company posted sales of Rs800 crore in 2006-07. “We are hopeful of registering a 25% growth in our turnover this year,” said Om Narayan.
“From the consumer perspective it is very good. If the entire NCR has access to CNG, travelling anywhere within the region it would not be a problem, even if they run out of gas,” said Prayesh Jain, an analyst at stock market research firm India Infoline Ltd.
All the gas under administered prices is produced by government-owned companies Oil and Natural Gas Corp. Ltd and Oil India Ltd.