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IGL hopes its Delhi success story is not just gas

Ajay Modi  |  New Delhi 

With India’s gas production outpacing its crude oil production in 2009-10, the hankering for gas allocation has increased, too, but the lack of adequate gas infrastructure has seen the country losing out on gains from falling international prices. In a six-part series, Business Standard takes a look at the need for adequate infrastructure, even as cities are changing with relatively new gas lifelines.

Ltd, or IGL, shows all the benefits of having a free run in a lucrative market. The sole supplier of compressed natural gas (CNG) and piped natural gas in the national capital region has doubled its turnover and profits over the last five years.

That is not bad for a company which was created out of necessity when the Supreme Court, following a public interest suit, ordered in July 1998 that all public transport vehicles in Delhi move to and a network of at least 70 filling stations be created for them.

Spurred on by authorisation from the government last month, the company has now entered Ghaziabad, which, alongside Noida, is a breeding ground for large housing complexes (in other words, potential customers who would want to get rid of the tyranny of cumbersome cylinders).

Compression capacity : 36.40 lakh Kg/day
No of stations : 241
No of vehicles in Delhi/NCR : 3,40,000
No of domestic customers : over 1,90,000
No of Large Commercials : 52
No of Small Commercials : 305
Operational cost of vehicles is 62 per cent lower than petrol and 27 per cent lower than diesel.
Net sales (2009-10) Rs 1,078 crore
Net profit (2009-10) Rs 215.49 crore

Gurgaon in NCR is way behind Delhi in city gas connectivity. It has only a handful of stations run by Haryana Gas Company and virtually no piped gas connectivity.

However, experts doubt that Delhi’s success would be replicated elsewhere. The doubters include L Mansingh, the chairman of downstream regulator Petroleum and Natural Gas Regulatory Board, who attributes the development of the network in Delhi primarily to the Supreme Court’s intervention.

Many are also quick to point out that the company’s filling stations in Delhi’s prime locations continue to have long queues.

The running cost of a car on CNG, despite a recent price rise of Rs 5.60 a kg, remains about 62 per cent cheaper than those run on petrol and 27 per cent cheaper than the diesel ones. That ensures enormous interest of buyers in vehicles. The fact that many of them, given the tank capacity, need to visit a filling station every couple of days does nothing to shorten the queues.

IGL, though, remains sanguine. The queues, it says, would vanish once it is allowed to operationalise the 40-odd stations which are stuck in the maze of clearances.

“We have been proactive in expanding the pump network. However, due to the long-drawn licensing process involving various departments, 40 stations are unable to dispense The licensing process takes up to six months in most cases and that is the only thing coming in the way. It is not a delay at our end,” IGL Managing Director told Business Standard.

In the last financial year, IGL set up 60 stations. Another 39 are in different stages of development. By March next year, the company hopes to have 280. “We have doubled our capacity to service the consumers in the last three years and invested over Rs 1,000 crore. This is no mean achievement,” Vedvyas said.

On the piped natural gas, Vedvyas said the company had been unable to dig for pipes as large parts of the city are already dug up in preparation for the Commonwealth Games, to be held in October. “We have 190,000 piped natural gas connections across Delhi and NCR. We plan to give 60,000-70,000 new connections every year in Delhi and 10,000-15,000 in NCR. There is no dearth of resources,” said Vedvyas.

In Ghaziabad, its new territory, IGL is facing problems because the GAIL pipeline, which feeds IGL’s network in east Delhi, has limited capacity. “We are setting up a spur pipeline to address this problem. This pipeline should be completed by October,” said Vedvyas.

That, the company would hope, will establish that IGL’s Delhi success story is not just gas.

First Published: Wed, July 28 2010. 01:51 IST