Published On:January 17 2022
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City Gas Distribution: IOC to invest Rs. 7,000 Cr to develop 26 high potential districts.

State-run oil giant Indian Oil Corporation (IOC) said recently that it plans to invest ₹7,000 crore in developing city gas distribution (CGD) networks in nine high market potential geographical areas (GAs) that it has won in the recently concluded 11th round of CGD bidding.

IndianOil secured nearly 33 per cent of the demand potential in the bidding by Petroleum & Natural Gas Regulatory Board (PNGRB). The nearest competing bidder was left with less than 20 per cent of demand potential, the firm said in a statement.

With this win, IndianOil and its associates would service almost 28 per cent of the combined CGD potential in the 3 rounds of bidding till now, which is far ahead of the next major player, it added. IOC has two joint venture (JV) companies — Green Gas (with GAIL India) and IndianOil Adani Gas (with Adani Total Gas).

“IndianOil plans to invest over ₹7,000 crore in these new CGD projects, over and above the ₹20,000 crore already planned for its CGD vertical,” India’s biggest oil company said. In August 2018, the firm had said that it plans to invest ₹20,000 crore in CGD projects in the next 5-8 years.

The nine GAs include major districts such as Jammu, Pathankot, Sikar, Jalgaon, Guntur (Amravati), Tuticorin, Tirunelveli, Kanyakumari, Madurai, Dharmapuri and Haldia (East Mednipore). They have high demand customers across the industry, commercial and domestic spectrum for PNG (Piped Natural Gas) & CNG (Compressed Natural Gas), it added.

“Gas will play a significant role in India’s march towards a low carbon future as part of its Panchamrit pledge during COP-26 summit to reduce total carbon emissions by one billion tonnes from now till 2030,” IOC Chairman Shrikant Madhav Vaidya said.

Reflecting on the latest developments, he noted “With our intelligently aggressive approach in the latest CGD bidding process, we have been able to secure nine high market potential GAs that cover 26 districts spread across the country. And with this, IndianOil is poised to emerge as a dominant player in Indian CGD Market”.

The bidding results came out last week in which out of the total bids for 61 GAs, MEIL won 15 GAs followed by 14 GAs secured by Adani Total — the JV firm of Adani Group and French energy major Total. IOC and BPCL won nine GAs and six GAs, respectively, whereas Navi Mumbai-based Dinesh Engineers won bids for four GAs.

After the 11th round, IndianOil and its 2 JVs are present in 49 GAs and 105 districts across 21 States and UTs. On a standalone basis, it has presence in 26 GAs and 68 districts spread in 11 states and UT covering nearly 20 per cent of the total CGD market potential in GAs announced recently in 3 bidding rounds.

Previously, IOC had authorisation for 40 GAs across. In FY21, the oil company commissioned its first standalone GA in Rewa (Madhya Pradesh), while eight GAs were commissioned by it’s JVs. During the fiscal, it released 0.68 lakh PNG connections across all GAs, either by itself or through JVs.

Individually, it has commissioned 12 CNG stations in FY21 and commenced registration and on-boarding of domestic PNG customers in various GAs. In FY22, it has planned gas-in for GAs at Aurangabad (Maharashtra), Bokaro (Jharkhand), Ashoknagar (Madhya Pradesh) and Arwal (Bihar).

The government has set a target to raise the share of natural gas in the domestic energy mix to 15 per cent by 2030 from about 6.7 per cent at present. To achieve this target, the Ministry of Petroleum & Natural Gas (MoPNG) is expanding the national gas grid to about 35,000 Km from the current 20,000 Km.

It has also identified 232 GAs covering 407 districts in India spread over 27 States and union territories for deploying CGD networks to cover 96 per cent of population and 86 per cent of geographic area. Natural gas is primarily sourced from KG-D6, Mumbai offshore, Cambay basin, Ravva offshore, KG basin, Cauvery basin and by importing LNG.

As of November 2021, India had a total of 83.70 lakh PNG connections and 3,532 CNG stations on a provisional basis. Total consumption during November was 4,953 MMSCM (million metric standard cubic meters per day). Major consumers were fertiliser (32 per cent), CGD (22 per cent), power (13 per cent), refinery (7 per cent) and petrochemicals (5 per cent).


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