GAS GRID: FUEL FOR ALL

Prime Minister Narendra Modi laid the foundation stone in New Delhi for City Gas Distribution projects across 129 districts which won under the ninth CGD bidding round held recently. At each of the Geographical Areas across 19 states in India, the authorized entities also held their event locally. The projects, recently awarded by the Petroleum and Natural Gas Regulatory Board (PNGRB), would cover 65 GAs to bring gas to around half of the country’s population in 26 states and Union Territories. As part of a larger plan to shift towards an environment friendlier gas-based economy, the development of CGD networks will increase the availability of clean cooking fuel or Piped Natural Gas (PNG) and transportation fuel Compressed Natural Gas (CNG) for consumers. The project has covered 96 cities and districts covering 46.5 lakh households and 32 lakh CNG vehicles so far.

Analysis:

The City Gas Distribution Project is a very timely exercise and should have come a little earlier because the present mode of delivering gas to consumers with cylinders is a highly energy intensive exercise. It includes a retailer and transportation leading to harassment of the consumer. A consumer also does not know when the cylinder is going to end leading to anxiety of booking the next one. On the contrary, pipelines bring gas to the consumer directly, there is assurance of a continued supply and is more cost efficient.

While CNG is 60 per cent cheaper as compared to petrol and costs 45 per cent less than diesel, PNG is 40 per cent cheaper than the market price of liquefied petroleum gas (LPG) used for cooking.

Short term or immediate implications:

1. The extent to which consumers in urban areas will get access to gas through pipelines will allow taking these released gas cylinders for clean cooking to rural areas to rollout UJJWALA Scheme far more effectively.
2. If there is gas grid covering urban areas, then the whole range of industrial activities which today use dirty fuels and pollute the air can switch on to gas reducing air pollution to some extent.

As the rollout takes place, it is very important to see that the consumers who need gas for industrial and other commercial purposes get it very easily and the pricing issue is handled in such a way that it does not create distortions or rationing issue. It should be readily available for everyone at an affordable price. Hence, concurrent planning is needed.

PPP might be a right way forward but Government needs to take leadership (viability gap funding) in order to see that the whole value chain moves in a synchronized manner and ensures commercial viability. There should be enough LNG terminals, infrastructure, imports and pipelines, which bring gas from the coast.

 Challenges:

 Prime Minister Narendra Modi laid the foundation stone in New Delhi for City Gas Distribution projects across 129 districts which won under the ninth CGD bidding round held recently. At each of the Geographical Areas across 19 states in India, the authorized entities also held their event locally. The projects, recently awarded by the Petroleum and Natural Gas Regulatory Board (PNGRB), would cover 65 GAs to bring gas to around half of the country’s population in 26 states and Union Territories. As part of a larger plan to shift towards an environment friendlier gas-based economy, the development of CGD networks will increase the availability of clean cooking fuel or Piped Natural Gas (PNG) and transportation fuel Compressed Natural Gas (CNG) for consumers. The project has covered 96 cities and districts covering 46.5 lakh households and 32 lakh CNG vehicles so far.

Analysis:

The City Gas Distribution Project is a very timely exercise and should have come a little earlier because the present mode of delivering gas to consumers with cylinders is a highly energy intensive exercise. It includes a retailer and transportation leading to harassment of the consumer. A consumer also does not know when the cylinder is going to end leading to anxiety of booking the next one. On the contrary, pipelines bring gas to the consumer directly, there is assurance of a continued supply and is more cost efficient.

While CNG is 60 per cent cheaper as compared to petrol and costs 45 per cent less than diesel, PNG is 40 per cent cheaper than the market price of liquefied petroleum gas (LPG) used for cooking.

Short term or immediate implications:

1. The extent to which consumers in urban areas will get access to gas through pipelines will allow taking these released gas cylinders for clean cooking to rural areas to rollout UJJWALA Scheme far more effectively.
2. If there is gas grid covering urban areas, then the whole range of industrial activities which today use dirty fuels and pollute the air can switch on to gas reducing air pollution to some extent.

As the rollout takes place, it is very important to see that the consumers who need gas for industrial and other commercial purposes get it very easily and the pricing issue is handled in such a way that it does not create distortions or rationing issue. It should be readily available for everyone at an affordable price. Hence, concurrent planning is needed.

PPP might be a right way forward but Government needs to take leadership (viability gap funding) in order to see that the whole value chain moves in a synchronized manner and ensures commercial viability. There should be enough LNG terminals, infrastructure, imports and pipelines, which bring gas from the coast.

Challenges:

1. Pipeline connectivity needs a right way for uninterrupted supply and affordability.
2. Laws with respect to pipelines are quite unfair which need to be revisited. The amount of compensation given to the person under whose land the pipeline is being laid is very less as the land cannot be used further for agriculture or construction which of reasonable width.
3. Safety issues and consumer education.
4. Good outreach of distributor companies to all states and rural areas as petroleum is a central subject.

Conclusion:

It is good that the gas network is being laid but it also depends on the consumers to pay for the pipeline connection. The government is doing well by fixing the City Gas Distribution network and simultaneously extending the pipeline infrastructure. But the limits of this outreach will depend on India’s limits to be able to import those quantities of gas in terms of availability of exchange in times to come. To some consumers, gas could be a bridge fuel before they move on to electricity for clean cooking.

1. Pipeline connectivity needs a right way for uninterrupted supply and affordability.
2. Laws with respect to pipelines are quite unfair which need to be revisited. The amount of compensation given to the person under whose land the pipeline is being laid is very less as the land cannot be used further for agriculture or construction which of reasonable width.
3. Safety issues and consumer education.
4. Good outreach of distributor companies to all states and rural areas as petroleum is a central subject.