CGD in India-

Current Scenario & Way Forward

P.K Pandey
VP (Marketing)- IGL
1
ENERGY SCENARIO
IN INDIA

2
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
3
Energy holds key to Indias Growth

Indias GDP and primary energy

Energy demand are strongly linked.
Share of Natural Gas has remained
almost stable in Indias 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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 Energy holds key to Indias 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, Availability, Affordability &
Acceptability as it has a cleaner footprint than coal or
liquid fuels.

Considering the aim to curb the countrys carbon

emissions intensity by up to 35% from 2005 levels
by 2030, we have to increasingly meet energy needs
with renewables and natural gas.

Increase gas in the energy mix for India

from the current level to close to global
level by 2030.

Gas Based Economy # Gas4India

Source : http://www.bp.com/en_in/india/point-of-view/Moving_India_to_a_gas_based_economy.html 5
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.

Source : http://www.bp.com/en_in/india/point-of-view/Moving_India_to_a_gas_based_economy.html 6
 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

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Natural Gas Supply Network
Ministry is facilitating in increasing the
Natural Gas supply network
Pipeline Network, RLNG Terminals, 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.
Out of the proposed 15,000 km gas
Expand network of CNG pipeline, about 13,000 km has
stations already been authorized & these
Developing CNG corridors projects are at various stages of
implementation.
along the highways

Increasing capacity of existing RLNG terminals and Planning new RLNG

terminals
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 CITY GAS
DISTRIBUTION IN
INDIA:
CURRENT SCENARIO

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City Gas Distribution in India

City Gas Distribution is a

fast emerging industry
catering natural gas to
Automobiles, Households, Commercials
&Industrial units

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 Natural Gas Supply Network - CGD

7 new GAs announced by

PNGRB in Round 8
bidding - 2016 ~31 no. of companies operating in
more than 78 Geographical Areas

~1094 CNG stations

~3.27 million households

~Gas sales around 16 mmscmd

MGL Gail Gas BGL CUGL GGL IGL MNGL TNGCL

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 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. The number of agglomerations (smart cities)
will rise. Such evolutions will accelerate the development of City Gas
Distribution network (CGD)
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 Natural Gas Supply - CGD

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 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, continue
to face stiff competition from alternative liquid fuels.

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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, 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

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Natural Gas Customers CGD

PNG CNG
(Households) (Transport)

Commercials Industries

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CGD Network Layout

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 Operating Pipeline pressure

Operating
Location
Pressure

Steel Pipeline Network catering to CNG

19-26 Bar
station

MDPE Network 4 Bar

Industrial & Commercial Customers 0.3 4 Bar

Domestic Customers 0.021 Bar

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17
17
 CNG Network Layout

STEEL PIPELINE NATURAL GAS CARRIER

Mother station Online station

Booster
Daughter booster
station

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18
 REGULATORY
SCENARIO IN INDIA

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 Regulatory Scenario in India

PNGRB was constituted under The Petroleum and Natural

Gas Regulatory Board Act, 2006 on 1st October 2007

Regulator for downstream activities relating to petroleum,

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 - Fostering fair trade & competition amongst
entities

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 PNGRB Act, 2006

PNGRB formed with an objective to:

Regulate Refining, Processing, Storage, Transportation, Distribution,

Marketing And Sale Of Petroleum, 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, and equitable distribution
Monitor prices & take corrective actions
Maintain databank of information
Lay down technical standards / specifications
Perform other functions entrusted by Central Government

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 Notified Regulations

To ensure arms 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
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 Key features of CGD regulations

Type of Regulation Key features

Authorization Inviting, Evaluating, Authorizing & Monitoring
successful bidder for new areas
Authorizing Existing Entities under Reg. 17 & Reg. 18.
Exclusivity Infrastructure 25 years; 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, Installation & Safety Specifications
Operating & Maintenance Standards
Access Code Guidelines to provide access to CGD networks (common
carrier)

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Bid Evaluation Criteria

Evaluation
Criteria
Old New

Network Tariff
40% 70%

Compression
Charge 10% 30%

PNG Domestic
Connections 30% MWP

Inch Km
20% MWP

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 CITY GAS
DISTRIBUTION IN
INDIA:
WAY FORWARD

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 CGD Infrastructure in India Future Outlook
As per Vision 2030, Natural Gas Infrastructure in India: Report by
Industry Group for Petroleum & Natural Gas Regulatory Board,
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 demand would grow significantly at a CAGR of 6.8%

from 242.6 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)

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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

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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
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 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

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 Green Corridor Along National Highways

Government has advised leading CGD companies to

construct CNG stations along the major National
Highways from Delhi.

This will boost the intercity moment of vehicles with the

Green Fuel.
Location

NH 1 Delhi - Chandigarh

NH-2 Delhi-Agra

NH-8 Delhi - Jaipur

NH 10 Delhi - Rohtak

NH 24 Delhi-Moradabad

NH 58 Delhi-Meerut

NH 91 Delhi- Aligarh
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 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
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 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

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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

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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, as the CGD industry
today has very few local vendors that results into
High Imports - 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, better service support, low inventories etc.

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CGD Infrastructure in India Opportunities

Automation of Processes

Use of AMR (Automated Meter Reading)

Use of SCADA for monitoring CGD Network,
remote price change in CNG Dispensers, etc.
GIS mapping of pipelines
RFID (Radio Frequency Identification) tags for
CNG cylinders to check validity of cylinder hydro
testing Certificate

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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. Presently FCRI is the sole Govt. approved
agency for this purpose

*In 330 working days around 1000 cylinders would be required to be

tested per day

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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

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CHALLENGES IN
CITY GAS
DISTRIBUTION IN
INDIA

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 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

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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. LPG

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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 - permissions / NOCs
Exorbitant Road Restoration
Limited agencies for CNG cylinder
testing
Third Party Damages

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CGD Infrastructure in India Challenges

Others

3 Evolving Regulatory Scenario

Shortage of Skilled Manpower
Vendor Development
Spurious Kits and cylinders threaten
safety

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 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.

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

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THANKS SCENE

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