As regards Gujarat state, Gujarat Gas Company Limited, Sabarmati Gas Ltd. and GAIL (India) Ltd., have been allocated 6,00,000 scmd, 150,000 scmd and 125,000 SCMD respectively for supply to their industrial and commercial customers in Surat, Bharuch, Gandhinagar, Mehsana, Sabarkantha and Vadodara. In addition, GGCL is being supplied 2.13 MMSCMD and Gujarat State Petroleum Corporation Ltd. (GSPCL) is being supplied 1.1 MMSCMD from the Panna Mukta Tapti (PMT) field for supply to their CGD and small commercial and industrial customers.

The CGD entities as well as the small and medium enterprises are free to contract for Liquefied Natural Gas (LNG) supplies for which adequate capacity exists. CGD entities have procured around 2.82 MMSCMD of R-LNG for supply to their Domestic/ transport/ Commercial/ Industrial Customers. The details are as follows:

Name of the Entity LNG procured (SCMD)

Sabarmati Gas 468,129

GGCL 430,137

GSPC gas 1,707,417

IGL 60000

MGL 123000

Green Gas Ltd. 31636

Total 2,820,318

Grant of Authorisation

There are 22 entities engaged in CGD business in India.

Company Area of Operation

1. Gujarat Gas Surat, Bharuch & Ankleshwar

2. GSPC Daman, Rajkot & many other districts of Gujarat

3. Adani Energy Ahmedabad, Faridabad & Khurja

4. Sabarmati Gas Gandhinagar, Mehsana & Sabarkantha

5. Vadodara Mahanagar Seva Vadodara

6. Assam Gas Company Limited Duliajan & adjoing areas

7. Great Eastern Energy Corp. Ltd. Asansol & Durgapur

8. Siti Energy Moradabad

9. Indraprastha Gas Ltd. Delhi, Ghaziabad, Noida & Greater Noida

10. Mahanagar Gas Ltd. Mumbai, Thane, Mira Bhayandar, Navi Mumbai

11. Maharashtra Natural Gas Ltd. Pune

12. Central U.P. Gas Ltd. Kanpur, Bareilly

13. Green Gas Ltd. Agra & Lucknow

14. GAIL Vadodara

15. HPCL Ahmedabad

16. Bhagyanagar Gas Ltd. Hyderabad, Vijaywada & Rajahmundery

17. Tripura Natural Gas Ltd. Agartala

18. Aavantika Gas Ltd. Indore, Gwalior

19. Haryana City Gas Gurgaon

20. GAIL Gas Ltd. Dewas, Kota, Sonepat & Meerut

21. JV of DSM Infra Tech. & Saumya Mining Pvt. Ltd. Mathura

22. Charotar Gas Anand/Kheda

Cities authorized for CGD by Central Government and PNGRB

Cities for which authorizations have been issued by Central Government

S. No.

Name of Entities Area of Authorization Confirmation issued by PNGRB for

Geographical Area 

Authorization pending

1. Mahanagar Gas Limited

Mumba, Thane, Navi-Mumbai &Mira-Bhayender

Mumbai & Greater Mumbai

Thane, Navi Mumbai & Mira

2. Indraprasth a Gas Limited

Delhi, Gautam Buddha Nagar (Noida & Gr. Noida), Gurgaon and Faridabad

Delhi Noida & Greater Noida, Gurgaon & Faridabad

3. Central UP Gas Limited

Kanpur & Bareilly Bareilly & Kanpur inc!. Unnao & Rania

Nil

4. Maharashtra Natural Gas Limited

Pune including Pimpri- Chinchwad area

Pune, Pimpri Chichwad, Chaken, Talegaon & Hinjewadi

Nil

5. Tripura Natural Gas Company Limited

Agartala, Tripura - Entire

6. Green Gas Limited Lucknow, Agra & Taj Trapezium Zone.

Agra Lucknow

7. Aavantika Gas Limited

Indore, Gwalior & Ojjain Indore & Ujjain Gwalior

8. Bhagyanagar Gas Limited

Hyderabad& Vijaywada Hyderabad& Vijaywada Nil

9. GAIL (India) Limited

Vadodara - Entire

10. Sabarmati Gas Limited

Ghandhinagrr Mehsana Sabarkantha CGD Network

Ghandhinagar Mehsana Sabarkantha

Nil

CGD Networks which were earlier selected by PNGRB and subsequently authorized by Central Government

Name of the city Entities authorized

Dewas Gail Gas Ltd.

Kota Gail Gas Ltd.

Sonepat Gail Gas Ltd.

Meerut Gail Gas Ltd.

Mathuaa JV of DSM Infra Tech & Saumya Mining Pvt. Ltd.

Kakinada Bhagyanagar Gas Ltd.

 

PNGRB has considered the authorisation granted by Central Government to 3VI/S Indraprastha Gas Limited (IGL) for city of Delhi to lay, build and operate city gas distribution network, and has allowed IGL exclusivity for 3 years. IGL has submitted its documents pertaining to the cities of Faridabad, Gurgaon and Gautambudh Nagar (Cities of Noida and Greater Noida) to PNGRB on the basis of authorisation granted by Central Government. Further IGL has applied to PNGRB for Ghaziabad, which is being

considered by PNGRB.

PNGRB has also considered authorisation granted by Central Government to MGL for Greater Mumbai and allowed exclusivity for 3 years. MGL has submitted document, for district Thane, including Mira-

Bhayendar and Navi Mumbai to PNGRB on the basis of authorisation earlier granted by Central Government. IGL has plans to cover NCT of Delhi, Noida/Greater Noida/Ghaziabad (U.P.),

Faridabad/Gurgaon/Sonepat/Panipat (Haryana) with PNG supplies in phases spread over next few years subject to necessary approvals from appropriate authorities.

City Gas Projects in India

S. No

Year City Company

1 1880 KolkataCalcutta Gas Company

2 1900 MumbaiBombay Gas Company

3 1972 VadodaraVadodara Municipal Corporation

4 1980 DelhiDelhi Municipal Corporation

51982-86

ONGC Colony at Mehsana & Sibsagar

ONGC

6 1985 Duliajan Assam Gas

Company

7 1986 SibsagarAssam Gas Company

81989-91

Surat, Ankleshwar, Bharuch

Gujarat Gas Company Ltd.

9 1994 MumbaiMahanagar Gas Ltd.

10 1995 DelhiIndraprastha Gas Ltd.

11 2004Vadodara & Ahmedabad

Adani Energy Ltd.

12 2005 HyderabadBhagyanagar Gas Ltd.

132006-07

Gandhinagar, Kadi, Mehsana, Rajkot, Morbi, Vapi

GSPC Gas/Sabarmati Gas

14 2006 Kanpur, Lucknow CUGL & GGL

As in April 2009 the Authorisation Status of Entities is as follows:

Authorisation Status of Entities

Authorised EntityGeographical Area Authorised by

MoP&NGAuthorisation accepted by

PNGRB

Indraprashtha Gas Ltd.Delhi & its suburbs, viz. NOIDA (Gautam Budh Nagar), Gurgaon & Faridabad

NCT of Delhi (01.01.2009)

Mahanagar Gas Ltd.Mumbai, Distt. Thane including Navi Mumbai & Mira Bhayander

Mumbai

Avantika Gas Ltd. Indore, Gwalior & Ujjain -

Bhagyanagr Gas Ltd. Hyderabad & VijayawadaDiscussion with PNGRB on 21.01.09

Maharashtra Natural Gas Ltd.

Pune including Pimpri-Chinchwad areaDiscussion with PNGRB on 02.02.09

Central UP Gas Ltd. Kanpur & BareillyDiscussion with PNGRB on 20.01.09

Green Gas Ltd. Lucknow, Agra -

Tripura Natural Gas Company Ltd.

Agartala, Tripura -

GAIL (1) Ltd. - Vadodara Vadodara  -

Entities Other Than Gail JVCs in CGD Business

Sate City Company

Gujarat

Ahmedabad Adani & HPCL

Surat, Ankleshwar & Bharuch Gujarat Gas Co. Ltd.

Hazira, Rajkot, Surendranagar GSPC Gas

Vadodara VMSS

Gandhinagar Sabarmati Gas

West Bengal

AsansolGreat Eastern Energy Corp. Ltd.

AssamDuliajan, Digboi, Dibrugarh, Moran, Naharkatiya, Sivsagar, Nazira, Simaluguri, Tinsukia

Assam Gas Company Ltd.

As per February 2009, the status of City Gas Projects in India is as follows:

S. No.

Entity

Geographical Areas

(GA) (Operating

)

GAs (Under

Construction)

Total

1

Mahanagar Gas Limited (MGL)

2 - 2

2

Indraprastha Gas Limited (IGL)

1.2 .2 4

3Aavantika Gas Ltd. (AGL)

1 1.2 3

4

Central U.P. Gas Ltd. (CUGL)

1.2 - 2

5

Green Gas Limited (GGL)

1.2 - 2

6

Gujarat Gas Company Ltd. (GGCL)

1.3 - 3

7 Maharashtra Natural

1 - 1

Gas Company Ltd. (MNGCL)

8

Tripura Natural Gas Company (TNGCL)

1 - 1

9

Bhagyanagar Gas Limited (BGL)

1.2   2

10Sabarmati Gas Limited

1.2   2

11GAIL (India) Ltd.

1.1 - 1

12

Hindustan Petroleum Corporation Ltd. (HPCL)

1.1 - 1

13

Charotar Gas Sahakari Mandali Ltd.

1.1 - 1

14

Vadodara Mahanagar Seva Sadan (VMSS)

1 - 1

15

Adani Energy Ltd. (AEnL)

2 1.6 8

16

GSPC Gas Company Ltd.

1.8 1.2 10

17Siti Energy Ltd. (SEL)     1

18Haryana City Gas

1 1.2 3

19 Assam Gas

1.4   4

Company Ltd. (AGCL)

20

Great Eastern Energy Corporation Ltd. (GEECL)

2   2

India currently has a CGD network in 21 cities with 0.85 million household connected and 0.45 million vehicles on compressed natural gas (CNG). But the total pipeline infrastructure, including 8,000 km of natural gas pipelines and 10,000 km of product pipelines, is inadequate to meet the country's requirements except oil.

Recent Developments

As in April 2009:

Total Gas Consumption : 3.688 MMSCMD Total Investment : Rs 1,673.93 crore No of CNG vehicles catered: 458804 No of household connected: 511709 Tentative replacement of fuel in quantity as well as in monetary terms:

o Petrol = Rs 2,909 crore o Diesel = Rs 2,244 crore o LPG = Rs 183 crore

Investments made by GAIL/JVCs for CGD Projects (As in April 2009)

Company City Investment Made (Rs. Cr.)

IGL Delhi & Noida 750

MGL Mumbai, Thane, Mira Bhayandar, Navi Mumbai 695.6

MNGL Pune 88

CUGLKanpur

115Bareilly

GGLLucknow

104Agra

BGLVijayawada

24Hyderabad

TNGCL Agartala 9.9

AGL Indore 27

Ujjain

GAIL Vadodara 8.5

Agra & Ferozabad 144.8

  Total 1966.8

CGD Likely Roll Out Plan (as in April 2009)

StateNo. of Potential

CitiesProjected Demand 

MMSCMDProjected Investment (in Rs/Cr)

Andhra Pradesh 37 5.02 2510Assam 8 5 2500Bihar 17 1.91 955Punjab & Himachal Pradesh

13 3.66 1830

Haryana 17 2.61 1305Gujarat 25 19.16 9580Jharkhand 5 0.5 250Karnataka 26 3.89 1945Kerala 14 2.52 1260Madhya Pradesh 5 0.97 485Maharashtra & Goa 12 8.08 4040Orissa 6 1.28 640Rajasthan 4 1.67 835Tamil Nadu 28 5.95 2975Uttar Pradesh & Uttarakhand

31 7.5 3750

West Bengal 50 4.62 2310Total 298 74.34 37170

As in February 2009, the cities for which Expressions of Interests (EOI) have been invited for CGD projects by Petroleum & Natural Gas Regulatory

Board are Kota (Rajasthan), Sonipat (Haryana), Mathura (Uttar Pradesh), Kakinada (Andhra Pradesh), Meerut (Uttar Pradesh), Dewas (Madhya Pradesh), Ghaziabad (Uttar Pradesh), Allahabad (Uttar Pradesh), Jhansi (Uttar Pradesh), Rajahmundry (Andhra Pradesh), Yanam (U.T. of Pondicherry), Shahdol (Madhya Pradesh) and Chandigarh (Union Territory).

PNGRB has also formulated a Roll-out Plan for the development of CGD networks in various other geographical areas in the years to come.

Years Geographical AreasBy 2010 85+By 2013 125By 2018 250

 City gas distribution (CGD) essentially consists of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG). Piped Natural Gas (PNG) is being presently supplied in the following cities and towns:-

Delhi, Mumbai, Agartala, Surat, Hazira, Junagam, Vasva, Mora, Damka, Bhatlai, Kawas, Rajgiri, Suwali, Icchapore, Ankleshwar, Bharauch, Vadodara, Ahmedabad, Vidyanagar, Anand, Morbi, Gandhinagar, Duliajan, Digboi, Dibrugarh, Moran, Naharkatiya, Sivasagar, Nazira, Simaluguri and Tinsukia.

Compressed Natural Gas (CNG) is being presently supplied to vehicles in the following cities:- Mumbai, Thane, Mira-Bhayandar, Delhi, Noida, Vijayawada, Hyderabad, Kanpur,

Lucknow, Agra, Agartala, Ahmedabad, Ankleshwar, Bharuch, Surat, Vadodara, Gandhinagar and Hazira.

As in July 2009, the cities/towns in Gujarat which are receiving CNG supply at present are Anand, Baidhana, Bharuch, Bhilad, Chankeda, Chikhali, Chotila, Wankaner, Ahmedabad, Dakor, Damen, Dhaban, Dhegam, Dhrampur, Gandhinagar, Godhra, Holol, Haxira, Kallol, Kalol, Khambhat, Khathlal, Morbid, Nadiad, Nar, Navsari, Padra, Palanpur, Pardi, Petlad, Rajkot, Sarigam, Sidhpur, Tankara, Umreth, Unjha, Valsad, Vapi, Surat, Ankleshwar, Kim Bardoli, Palej.

Piped Natural Gas is being supplied to 513068 domestic, 1433 commercial and 69 industrial consumers all over the country.

As in November 2009, the statewise number of cities/towns covered with CNG or PNG facilities in the country is as follows:

StateNo. of cities with CNG/PNG facilities

Andhra Pradesh 3

Assam 8

Delhi 1

Gujarat 26

Haryana 2

Madhya Pradesh 2

Maharashtra 5

Tripura 1

Uttar Pradesh 7

West Bengal 5

Total 60

Ministry of Petroleum & Natural Gas has finalised ‘Vision-2015’ of the Oil sector for ‘Consumer Satisfaction and Beyond’, wherein efforts would be made to provide CNG/PNG facilities to 200 more cities by the year 2015. As the natural gas is supplied to CNG stations through pipes at high pressure and to PNG consumers without any intermediate handling using equipments of international standards, there is no pilferage of CNG and PNG.

GAIL's Joint Ventures (As in July 2009)

Sr. No. Name of JVC JV Partners Equity Stake (As per JVA)

1 Indraprastha Gas Ltd.GAIL (India) Limited &

BPCLGAIL: 22.5%, BPCL: 22.5%, Delhi Govt: 5%, FIIs/FIs/ Public and others: 50%

2 Mahanagar Gas Ltd.GAIL (India) Limited &

British Gas

GAIL: 35% (Current 49.75%), British Gas:  35% (Current 49.75%), Maharashtra Govt.: 10% (Current 0.5%), Public: 20% (Current - Nil)

3 Bhagya Nagar Gas Ltd.GAIL (India) Limited &

HPCLGAIL: 22.5%, HPCL: 22.5%, State Govt: 5%, FIIs/FIs/ Public and others: 50%

4 Tripura Natural Gas Ltd. GAIL (India) Limited, GAIL: 29%, TIDC: 10%, AGCL: 10%, Public and

AGCL & TIDC others: 51%

5 Central U.P. Gas Ltd.GAIL (India) Limited &

BPCLGAIL: 22.5%, BPCL: 22.5%, State Govt: 5%, FIIs/FIs/ Public and others: 50%

6 Green Gas Ltd.GAIL (India) Limited &

IOCLGAIL: 22.5%, IOCL: 22.5%, State Govt: 5%, FIIs/FIs/ Public and others: 50%

7Maharashtra Natural Gas Ltd.

GAIL (India) Limited & BPCL

GAIL: 22.5%, BPCL: 22.5%, State Govt: 5%, FIIs/FIs/ Public and others: 50%

8 Aavantika Gas Ltd.GAIL (India) Limited &

HPCLGAIL: 22.5%, HPCL: 22.5%, State Govt: 5%, FIIs/FIs/ Public and others: 50%

9 GAIL (India) Limited Not a JV --

10 GAIL Gas LimitedA 100% subsidiary of GAIL (India) Limited GAIL : 100%

Status of PNG Activities Undertaken by:

GAIL JVs

S. No.

States Name of the City Name of the Company PNG Consumers

Dom. Comml. lndl.

1 Maharashtra Mumbai and suburb Mahanagar Gas Limited 373210 991 34

2 Delhi/NCR Delhi & suburbs Indraprastha Gas Limited 133288 336 16

3 Uttar Pradesh Kanpur, Bareilly Central UP Gas Limited Nil Nil Nil

Lucknow, Agra Green Gas Limited Nil Nil Nil

4 Andhra Pradesh

Vijayawada, Hyderabad

Bhagyanagar Gas Limited Nil Nil Nil

5 Tripura Agartala Tripura Natural Gas Company Limited

6570 106 19

6 Gujarat Vadodara GAIL (only CNG) - - -

7 Madhya Pradesh

Indore and Ujjain Aavantika Gas Company - - -

Total 513068 1433 69

Other Companies

1.

S. No.

States Name of the cities Name of the companies Domestic Consumers

1. Gujarat Surat, Bharuch, Ankleshwar, etc.

Gujarat Gas Company Limited

2,00,000

Ahmedabad Adani Energy Limited, 20,000

HPCL -

Vadodara Vadodara Mahanagar Seva Sadan

85,000

Rajkot, Murbi, etc. GSPC 23,000

Anand & Near by Villages

Charotar Gas -

Gandhinagar Sabarmati Gas Limited -

2. Haryana Gurgaon, HCDGCL -

Faridabad Adani Energy Limited -

3. Assam Duliajan, Guwahati & others

Assam Gas company Ltd. 20,000

4. West Bengal

Asansol & Durgapur Great Eastern Energy Corp. Ltd.

-

5. Uttar Pradesh

Mooradabad Siti Energy Ltd. -

Government has authorised nine new trunk natural gas pipelines, namely, Dadri-Bawana-Nangal, Chainsa-Gurgaon-Jhajjar-Hissar, Jagdishpur-Haldia, Dabhol-Bangalore,

Kochi-Kanjirkkod-Bangalore/Mangalore ,Kakinada-Basudebpur-Howrah, Vijaywada-Nellore-Chennai, Chennai-Tuticorin and Chennai-Bangalore-Mangalore Pipeline. These pipelines will pass through various areas in the states of Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Maharashtra, Haryana, Punjab,

Rajasthan, Uttar Pradesh, West Bengal, Orissa, Bihar and Jharkhand. Once these pipelines are commissioned, CGD projects will develop in cities/areas in proximity to these pipelines.

In order to promote investment from public as well as private sector for laying trunk natural gas pipelines and city/local natural gas distribution networks throughout the country, the Government of India has

enacted 'The Petroleum and Natural Gas Regulatory Board Act, 2006'.

As on August 2008, PNGRB has received expression of interests (EOI) from M/s GAIL Gas limited, M/s Reliance Gas Company limited (RGCL), M/s Gujarat Gas Co Ltd (GGCL) and M/s Torrent Power. Accordingly PNGRB put up the EOIs for public notice dated 24th June, 28th June, 29th August, 6th October, 17th Nov and 21st Nov 2008. RGCL and M/s GAIL Gas submitted EOI for 60 cities and 7 cities respectively. GGCL submitted EOI for two cities in Gujarat and M/s Torrent Power submitted EOI for one city also in Gujarat.

The region wise breakup of the same is as under: -

Region No of cities Region No of cities Region No of cities Region No of cities

RGCL GAIL Gas GGCL Torrent Power

North 16 North 5 North North

East 1 East East East

West 23 West 2 West 2 West 1

South 20 South South South

Total 60 Total 7 Total 2 Total 1

Present City Gas Consumption in India (As in April 2009)

Cities CompanyAvg, CNG Gas Sales

Avg. Gas Sales

Domestic

Avg. Gas Sales Commercial &

Industrial

Total Sales (MMSCMD)

Delhi IGL 1.692 0.047 0.103 1.842

Mumbai

MGL

1.036

0.165 0.263

1.464

Thane 0.080 0.080

Mira Bhayandar 0.033 0.033

Navi Mumbai 0.006 0.006

Pune MNGL 0.000 0 0 0.000

KanpurCUGL

0.0540

0 0.054

Barrielly 0.005 0 0.005

LucknowGGL

0.054 0 0 0.054

Agra 0.034 0 0.037 0.071

Vadodara GAIL 0.040 0 0 0.040

VijayawadaBGL

0 009 0 0 0.009

Hyderabad 0.005 0 0 0.005

Agartala TNGCL 0 003 0.013 0.009 0.025

lndore AGL 0.000 0 0 0.000

Surat Bharuch & Ankleshwar

GGCL 0.15 0.090 3.850 4.090

Ahmedabad AEL 0.2 0.011 0.190 0.401

Gandhinagar SCL 0.04 0.002 0.012 0.054

Total   3.441 0.3286 4.464 8.2336

 

Gas Supply to CGD Projects (As in April 2009)

CGD Projects CitiesEstd. Addl.

DemandBest

Endeavour

(MMSCMD)   2009 Basis-2009

IGLDelhi, Noida, Gurgaon, Faridabad & Greater Noida

0.20 0.20

MGLMumbai, Navi Mumbai, Thane, Mira Bhayander

160 1.60

CUGL Kanpur & Bareilly 0.50 0.50

GGL Lucknow & Agra 0.40 0.40

MNGL Pune, Pimpri, Chinchwad 0.40 0.40

BGL Hyderabad & Vijayawada 0.20 0.20

AGL Indore, Gwalior & Ujjain 0.66 0.66

TNGCL Agartala - -

GAIL Vadodara 0.03 0.03

GAIL Gas Ltd.- New Proj.

Various Cities 0.04 0.04

Total   4.03 4.03

Excludes CGD project other than GAIL

GAIL/JVCs of GAIL are augmenting the CNG infrastructure and number of CNG stations in the respective cities to meet the increased requirement of conversion of vehicles to CNG. Further, the Ministry of Petroleum & Natural Gas (MoPNG) has formulated the gas utilisation policy for utilisation of natural gas produced from NELP blocks and has allocated 5 MMSCMD of natural gas to the city gas projects from 40 MMSCMD natural gas expected to be available from Reliance KG Basin fields in the first quarter of 2009.

(Updated in May 2010)

Status of CGD Activities (as of August 2008)

 

Supply of Gas to CGD Projects (Sabarmati Gas Ltd) Data as on 30th June, 2009

Source of Gas (presently only imported R-LNG)

Present Source of Gas

Average Availability

Period of Contract

Whether Contract is Firm/Fall back

Overdrawal, if any or Spot Supply

GSPC1.50 Lacs SCMD

Long Term for 5 years

FirmAdditional overdrawal on Spot Price Basis 

BPCL1.50 Lacs SCMD

Long Term for 5 years

Firm Not Applicable

Domestic Sector

Districts Qty sold to domestic sector in

No of Households

connected as

Increase Expected by

September-09 in

Necessary Infrastructure by

September-09

Total Increase in

2009-10

SCMD on 30/06/09 Nos. / Qty Nos. / Qty

Gandhinagar 2,735 4,5571,736 nos. / 1,042 SCMD

Expansion of Network

2,800 nos. 1,680 SCMD

Mehsana 3,730 6,2161,733 nos. / 1,040 SCMD

-do-7,200 nos. 4,320 SCMD

Sabarkantha 1,700 2,832 873 nos. / 524 V  -do-5,000 nos. 3,000 SCMD

Total 8,165 SCMD 13,605 nos.4,342 nos. / 2,605 SCMD

-do-15,000 nos. 9,000 SCMD

Transport Sector

Qty sold to domestic sector in SCMD

Present No of CNG stations as on 30/6/09

Increase Expected by September '09 in SCMD

Necessary Infrastructure by September '09

Total Increase in 2009-10 -stations / Qty SCMD

28,912 6 1,500 1 Additional CNG station 4 stations / 3,800 SCMD

17,373 3 3,200 2 Additional CNG stations 3 stations / 6,800 SCMD

6,707 1 2.500 2 Additional CNG stations 2 stations / 11,000 SCMD

52,992 SCMD 10 Stations 7,200 SCMD 5 Stations 9 stations / 21,600

Commercial Sector

Districts Qty presently sold to Commercial sector in SCMD

No. of Commercial Units presently connected

Gandhinagar 555 SCMD 37 nos.

Mehsana 465 V 31 nos.

Sabarkantha 240 SCMD 16 nos.

Total 1,260 SCMD 84 nos.

Industrial Sector

Districts Industrial Sales in Lacs SCMD No of Industrial Units presently connected

Total 3.19 Lacs SCMD 108 nos.

Average Daily Requirement for Household & Transport Sector

Districts Average daily Requirement only by Seotember 2009

Domestic Household Qty Transport Qty Total SCMD

Gandhinagar 3,777 SCMD 30,412 SCMD 34,189

Mehsana 4,770 SCMD 20,573 SCMD 25,343

Sabarkantha 2,224 SCMD 9,207 SCMD 11,431

Total 10,770 SCMD 60,192 SCMD 70,963

Sources of Gas Expected to be tied up - 77,593 SCMD Gas, allocated by MoP&NG, being tied up with M/s Reliance Industries Ltd.

Sabarmati Gas Ltd - Progress Report as in February 2009

 

Requirement of Gas for Household and Transport Purposes Month-wise Build Up

Sabarmati Gas Ltd (SGL): Estimated Gas Demand (Average SCMD)

S. No

Segment

FY-2010

Apr-09

May-09

Jun-09

Jul-09Aug-09

Sep-09 Oct-09Nov-09

Dec-09

Jan-10

Feb-10

Mar-10Yrly Average

1

Domestic Household

8600 4050 4335 4640 4960 5300 5675 6075 6500 6960 7450 7975 8600 6043

2 CMG"%000

48600 51300 51300 52650 54000 56700 63450 64800 64800 64868 64922 65003 58533

 Sub Total

73600 52650 55635 55940 57610 59300 62375 69525 71300 71760 72318 72897 73603 64576

 MMSCMD

0.074 0.053 0.056 0.056 0.058 0.059 0.062 0.070 0.071 0.072 0.072 0.073 0.074 0.065

3Commercial

1300 1000 1020 1040 1060 1080 1100 1125 1150 1175 1200 1250 1300 13500

4Industrial

590000

440000

452000

464000

476600489500

503000517000

531000

548000

561000

580000

590000

6152100

 Total (SCMD)

664900

493650

508655

520980

535270549880

566475587650

603450

620935

634518

654147

664903

8940512

 MMSCMD

0.66 0.49 0.51 0.52 0.54 0.55 0.57 0.59 0.60 0.62 0.63 0.65 0.66 0.58

Remarks : Out of Industrial Sales 17% Account for Power Generation (0.1 MMSCMD)

Sabarmati Gas Ltd: Estimated Gas Demand

S. No. Segment F.Y.2010 F.Y.2011 F.Y.2012 F.Y.2013 F.Y.2014

1 Domestic Household 8600 13300 18200 22300 23900

2 CNG 65000 78000  94000 104000 115000

3 Commercial 1300 1200 1800 2200 2400

4 Industrial 590000 725000 1040000 1273000 1720000

  Total (SCMD) 664900 817500 1154000 1401500 1861300

  MMSCMD 0.66 0.82 1.15 1.40 1.86

Sabarmati Gas Ltd., Plot No 272-273, NCDC Building, Sector-16, Gandhinagar - 382016 (Fax: 079-23249073)

1. Sourcing of gas by Sabarmati Gas for purpose other than Domestic and Transport: GSPC, including 0.1 MMSCMD on long-term basis. SGL has signed MoU with GSPC and BPCL for supply of gas on best endeavor basis. Short fall in availability and market demand will be met through spot purchase.

2. Amount of non-APM gas presently being used: Entire gas being marketed by SGL is non-APM. Sales volume-0.35 - 0.5 MMSCMD

Financial Closure of SGL:

1. Long Term Loan: Rs 273 crore as long term loan was tied up in December 2007 with a consortium of five banks (SBI, BOB, P&SB, OBC & SBT). 2.0

2. Equity Closure: Promoters (BPCL & GSPC/GSPL) have contributed Rs 80 crore approximately as share application money. SBI Caps has been appointed as Consultant for Equity Closure. Term-Sheet has been agreed and finalized with four prospective financial institutions. The bids are expected this month (February 2009). SGL's endeavor is to complete the Equity Closure process by end of March 2009.

3. Present Equity Structure of the Company: The shares of SGL are not listed on any stock exchange. The face value is Rs 10/Equity Share. The shareholding pattern of SGL is as follows:

Share holder No. of Shares % of Issued Capital

Bharat Petroleum Corporation Ltd. 12,500 24.90%

Gujarat State Petroleum Corporation Ltd. 12,500 24.90%

Individual Shareholders 25.200 50.20%

Total 50,200 100%

Physical Progress

Location/SegmentsDomestic

Transport/CNG Commercial Industrial

Gandhinagar District:

Gandhinagar   Done    

Adalaj Trimandir PUW PUW PUW  

Koba   Done    

Pethapur   PUW    

Khoraj PUW PUW    

Mansa PUW   PUW PUW

Dehgam PUW PUW PUW PUW

Kalol (2 nos.) Done Done/one PUW Done Done

Santej PUW PUW PUW Done

Mehsana District:

Mehsana (4 nos.) Done Done/ Three nos. PUW Done Done

Chhatral PUW PUW PUW Done

Amipura/Unawa   PUW    

Visnagar   PUW    

Vijapur   PUW    

Kadi Done Done Done Done

Palvasana PUW PUW   Done

Shobhasan PUW   PUW PUW

Kaiyyal PUW   PUW Done

Sabarkantha District:

Himmatnagar (3 nos.) Done Done/ Two PUW Done Done

Prantij PUW PUW PUW PUW

Abbreviations: Done - where already completedPUW - Project under way

Summary:

1. PNG: As on 01-02-09, SGL has 6,000 PNG customers spread in Kalol, Kadi, Himmatnagar and Mehsana. Customer care centers at all these locations are functioning to provide high standard of customer service.

2. CNG: As on 01-02-09, SGL has 6 CNG stations (all online) functioning and 17 nos. are at various stages of execution.

3. Industrial Customers: As on 31-12-08, SGL has 88 nos, with aggregate connected load of 0.58 MMSCMD.

Power generation customers aggregate to 0.1 MMSCMD (17 % of total).

Discussions with PNGRB under Regulation 17 of PNGRB (authorizing entities to lay, build, operate or expand city or local natural gas distribution network) Regulations, 2008: Vide its letter of 19th Nov-08, information in respect of CGD network of SGL in the districts of Gandhinagar, Mehsana, Sabarkantha in the state of Gujarat have been submitted under Schedule H under Regulation 17(2) to PNGRB. Request to grant exclusivity for the period as applicable under the Regulation without curtailing the areas authorized by the Central Government has also been sought.

As on 31 December 2008

Locations

Total Connected DCQ Qty in SCMD

SGLThrough Asset Transfer

BPCL GSPL

Santej 16415 45300 0

Ambapur   30000  

Kalol 66175    

Kadi 620Q0    

Himmatnagar 108600   130000

Chhatral 37250    

Mehsana 39500    

A. Industrial Total                                620240 

Gandhinagar GSRTC CNG   18000  

Mehsana CNG 10000    

Himmatnagar CNG 5000    

Kadi CNG 5000    

Kalol CNG 5000    

Koba CNG 5000    

B. CNG Total 48000 

C. Grand Total359940 93300 130000

583240

Power Generation Customer Details (As on 31 December 2008)

S. No

Customer Name Area Industry Type DCQ scmd

1 Mother Dairy Bhat Power Generation 30000

2 Kalptaru Papers Ltd Santej Power Generation 7000

3 Veer Plastics Santej Power Generation 6800

4 Gopala Polyplast Santej Power Generation 6250

5 Premier Synthetics Santej Power Generation 2000

6 Sintex Industries Kalol Power Generation 50000

7 Arvind Mills Santej Power Generation 0

  Total     1020S0

As on 31 December 2008

Product Mix Total Qty (SCMD) % Sectorwise

Ceramic 283100 49

Metal (steel/alloys) 51000 9

Crockery 4500 1

Power Generation 102050 17

Dairy 45000 8

Others 49590 9

CNG 48000 8

Total 583240 100

 

SGL to set up CNG dispensers at Essar Retail Outlets

A compressed natural gas (CNG) Joint Venture (JV) agreement was signed between Essar Oil and Sabarmati Gas Ltd. (SGL) in 2009. According to the agreement, SGL will install CNG dispensers at Essar's 26 retail outlets (RO) and Essar is to manage the fuel sales. The first CNG dispensing unit was commissioned on February 9, 2011 at Essar's RO in Unnav town near Unjha in Mehsana. SGL plans to commission another six CNG pumps in 2011 in Gujarat at Essar's ROs at Visnagar and Vadnagar in Mehsana, Dehgam and Mansa cities, Bhat in Gandhinagar district and Idar in Sabarkantha district.

It seems to be a win-win deal for Essar and SGL as the former can enter into the CNG business through already established ROs and the latter does not need to procure lands for setting up CNG stations. As the demand of CNG is on rise in Gujarat, the need for setting up of infrastructure has arisen.

SGL is a JV between Bharat Petroleum Corporation Ltd. (BPCL) and Gujarat State Petroleum Company (GSPC) and is the only CGD entity to receive D6 gas supplies. It began receiving 77,492 cubic metres per day gas in September 2009. However, it can only sell these supplies as CNG or PNG (piped natural gas).

The company operates 15 CNG stations in Gujarat, which includes 12 mother stations and 3 daughter stations, selling 85,000 kg/day of CNG. By March 2012, SGL expects the total CNG sales to rise to 140,000 kg/day. SGL also gets R-LNG by long-term contracts from the Dahej & Hazira terminal, which is about 70 per cent of its gas supplies.

Merger

GSPC close to merging unlisted unit Sabarmati Gas with its gas distribution subsidiary to increase its presence in gas distribution business

in Gujarat  : 5/12/2010 12:00:00 AM Gujarat State Petroleum Corporation (GSPC), a state government-owned oil and gas major,

is close to merging unlisted unit Sabarmati Gas with its gas distribution subsidiary, GSPC Gas, to increase its presence in the gas distribution business in Gujarat. The department of energy and petrochemicals, which is the nodal ministry for energy in the state, has given its in-principal approval to the merger and a swap ratio is expected to be completed within a month, said people close to the development. “The government has approved the merger and BPCL, which is a shareholder in Sabarmati Gas, and GSPC are in the process of finalising the deal,” said a person involved in the process that cleared the deal.

Gujarat principal secretary for energy and petrochemicals DJ Pandian and GSPC managing director Tapan Ray couldn’t be reached for their comments. A BPCL spokesperson declined to comment. GSPC Gas is a fully-owned gas distribution company of GSPC, while Sabarmati Gas is promoted by GSPC and BPCL which own 25% equity stake each. IFCI Venture Capital Funds, IDFC Project Equity and Unit Trust of India are the other stakeholders of Sabarmati Gas, with 16% equity stake.

Government officials are convinced that Sabarmati Gas would grow faster if it is merged with a bigger player like GSPC that has a consumer base of over one lakh. “Merger of Sabarmati Gas with GSPC Gas company would result in better synergy for both the players, especially in expanding the CNG network. It will also attract better profitability,” said a top official with one of the city gas distribution companies. According to industry analysts, BPCL’s presence is limited to only Gandhinagar in Gujarat, accounting for over 35% of India’s gas consumption. Gujarat is the most lucrative market for CGD players and is expected to scale up to over 20 lakh gas connections in the next four years, from the

existing six lakh connections. The proposed merger would give BPCL a better presence in Gujarat’s city gas distribution.

“BPCL, along with other partners, would be issued GSPC Gas equity in lieu of their present stake in the company. In addition, BPCL could get benefit from the gas distribution network expansion,” said a BPCL senior executive, requesting anonymity. In 2006, BPCL had formed the joint venture with GSPC for development of CDG networks and related infrastructure in the state. “We have assessed the financial feasibility of the merger. It will provide better scope for expansion,” said the BPCL official.

Sabarmati Gas has a consumer base of 20,000 and manages 14 CNG stations. It is targeting to add another 10 CNG stations and one lakh consumers in the next four years. Sabarmati has booked an earning of over Rs 250 crore in 2008-09. On the other hand, GSPC Gas posted an income of over Rs 850 crore for the same year. It has 17 CGD networks and 64 CNG stations.

Challenges of City Gas Distribution[R V Shahi's Weekly Column for Infraline, February 4, 2008]

Gas distribution in Indian cities through pipeline network is relatively a new concept. Even 10 years ago, cities like Delhi and Mumbai did not have, for consumers, the piped gas supply system. Compressed Natural Gas (CNG) for transportation is even more recent. In whichever towns/cities the piped gas supply for consumers and CNG for transportation (for example in Delhi) has been brought into use, there is a dramatic effect not only on convenience to consumers but also it has brought about a significant positive impact on environment (less air pollution). Recently, the first Euro Asian Conference Cum Exhibition was organised at Delhi by National Engineering and General Industries India, Energy Management International, U.K., and Organisation Dynamics India. I participated partly in this conference and chaired one of the key sessions dealing with Investment Opportunities in City Gas Projects. A number of important issues emerged. I outline below the substance of the opening remarks I made :

Since the beginning of 1990's, when the 21st Century was yet to arrive, most of the energy professionals were of the view that if the 20th Century was of coal and subsequently of oil, the 21st Century would be dominated by the most important energy resource i.e. gas. A number of projections were made. But somehow, in spite of gas being an environment friendly fuel, it has not been able to occupy the space that we were all looking forward to. For example, in power generation, even though almost 45% of gas available in India is allocated to power, we are hardly about 7% of the total installed capacity based on gas. Therefore, gas being the fuel of 21st Century is not only illusory but, at least in India, we are all waiting for it like a mirage in desert. Perhaps after the KG Basin gas comes the situation may change.

Overall availability of gas has obviously constrained the process of large scale shift in transportation from liquid fuel to compressed natural gas. Under the direction of the Supreme Court, and with highly positive impact on pollution, a substantial amount of road transportation in Delhi has shifted to CNG, but a lot more remains to be done in Delhi and more so in other towns and cities.

As regards domestic piped gas supply, in the whole country hardly 8 lac homes have been provided. Even in Delhi the level of penetration is hardly 3%. The rate of growth, in terms of coverage, in a period of last 8

to 10 years is not something which we energy professionals in general and those energy professionals, who are engaged in city gas distribution in particular, can be proud of. It has really been very slow.

As a customer of piped gas supply for almost 5 years in Bapa Nagar (the Government Colony for Govt. of India Secretaries and other Senior Officers), I can authentically say that as a service provider for the existing customers, the city gas company could legitimately claim to be ranked in excellent category. However, as one wanting to be a customer from an important locality close to All India Institute of Medical Sciences, I am rather reluctant to rate the gas distribution company even as Average for the reason that the company's response to enlarge the coverage and provide the service to more customers is somewhat indifferent. This brings out, at a conceptual plane, our inability to service both existing and prospective customers in a professional manner.

One of the reasons of the slow pace of enlarging the city gas distribution network, in cities where it exists, and taking up new cities has no doubt been the lack of availability of sufficient amount of gas. We are well aware that as it is, it has not been possible for the power sector to embark upon large expansions through gas based power generation capacities. In fact, almost one third of the capacity based on gas (and that works out to over 4,000 MW) remains unused for want of gas. The overall utilisation of gas based power plant capacity in the country is less than 70%, whereas coal based plants run at more than 80%, and gas plants, if gas was available, could run at more than 90%.

Historically power and fertiliser, two important inputs for industry and agriculture, have occupied the largest share (almost 85%) of the total supply of gas. In spite of this, the shortage has caused under utilisation of capacities.

We are also aware that both these sectors continue to put forward their arguments for even higher allocations. The argument of the power sector has been that it is a prime mover of every segment of economy and therefore has the potential of large scale multiplier effect on economy. Similarly good agricultural output is essential for food security of the country. Therefore, the constraint of the city gas distributor, though valid from the point of view of lack of availability, and the whole issue need to be dispassionately examined and appreciated keeping in view entirety of the situation and intersectoral requirements.

The average price at which the natural gas is supplied by Gas Authority of India Ltd. is about 3 dollars per million BTU (based on the Administered Price Mechanism). When the domestic gas is delivered to consumers, it is around 6 dollars per million BTU. This is on account of the additionality of costs that get added, which include the cost of infrastructure of distribution, its maintenance, overheads and profit margin of the gas distribution company. Obviously, when the whole issue of pricing is examined by the Petroleum Regulatory Board the true picture will emerge.

One of the ways to supplement the gas, which is supplied through domestic production, is through import of Liquefied Natural Gas (LNG) and that could have provided opportunities for expanding in a significant way the customer base in the existing towns and in also covering new towns. But, unfortunately due to the erratic price behaviour of LNG it has not been possible. I recall, in the beginning of 10th Plan (2002) there was an ambitious programme for setting up a chain of LNG terminals both on Eastern and Western coasts, with the idea that liquefied gas would be imported, regasified at these terminals and then the gas after regasification will be supplied though network of pipelines. One does not know why and how the gas suppliers have linked the movement of gas price with that of crude. In a period of 10 years the crude price has moved up almost 10 times from about 10 dollars a barrel to 100 dollars a barrel. It appears that the CIF price of LNG at terminal, at present could be as high as 8 to 9 dollars per million BTU and therefore after adding the cost of regasification and transportation etc. the delivered price to bulk buyers will be almost 10 dollars per million BTU. With this type of a price level, and more importantly highly unpredictable and erratic price behaviour, any long term planning of city gas distribution get severely constrained.

The whole country hoped that when the Petroleum Regulatory Bill becomes an Act, the statutory authority viz. the Petroleum Regulatory Board will try to balance the interests of all the stakeholders including customers and therefore will determine price with such an approach. We do have Petroleum Regulatory Act now. We also have Petroleum Regulatory Board. What we do not, however, have is the Board empowered to do anything with upstream gas. If upstream gas price is not regulated, there is very little that the Regulatory Board can do to safeguard the interests of consumers in so far as the price of gas for them is concerned.

There were three presentations in this session - by Director Crisil, Senior Representative from Adani Energy, Director, Earnst and Young and Executive Director MECON. The main points of these presentations, all of which together bring out various aspects and issues concerning city gas distribution, are summarised below :

In India at present we have city gas distribution in very limited places which include Delhi, Ahmedabad, Baroda, Mumbai, Mangalore and Bangalore. A number of new projects have been identified for other locations and they are under implementation. These include Faridabad, Agra, Lucknow, Kota, Cochin, Tripura and Calcutta. Even if we consider the projects in hand which will be implemented during next few years, the coverage is likely to be rather limited.

There are a number of benefits from the increased usage of natural gas through city gas distribution networks. These include its impact by way of bringing down the oil intensity of gross domestic product, which would help the country in withstanding the impacts of oil price in a more resilient fashion, reducing the crude import bill of the country resulting in substantial savings in foreign exchange which can be diverted to be used for development of infrastructure, replacement of LPG by natural gas would reduce the LPG subsidy burden on the Government and the possibility of distributed power generation along the gas pipeline network leading to more reliable power supply. Finally the natural gas usage in an extensive manner will have a substantial positive effect on pollution control.

In general, the experiences indicate that city gas distribution business is an attractive investment. For the year 2006 Gujarat gas had a revenue of around Rs. 970 crores and a profit of about Rs. 88 crores. Their return on capital employed was approximately 22%. The Indraprastha Gas, which operates the system in Delhi, had even better financial results - Rs. 521 crores of revenue, Rs. 106 crores of profit and 41% of return on capital employed. These encouraging results are clear indications of the attractiveness of the opportunity and therefore the preference of the potential investors. Perhaps, the only constraint seems to be the shortage of gas supply.

A typical gas distribution network would cost around Rs. 350 to 400 crores to handle a volume of the order of 1.5 million standard cubic meters. The build-up of the consumer base and therefore off-take is normally low and even in a period of 9 to 10 years the reasonable level of customer penetration is not more than 50 - 60%. (in case of Delhi and Mumbai, in spite of about 10 years of operation the customer penetration is in the range of 3 to 4%).

Long gestation together with low volume creates an adverse impact on the business and therefore it requires a good degree of patience.

The issues which can impact development of the City Gas Projects are as follows:

i. Since there is considerable amount of uncertainty about the availability of gas, normally the management decisions on capital expenditure for creating or augmenting the distribution infrastructure gets delayed.

ii. There are uncertainties about demand linked to uncertainties about the gas supply. Equipment manufacturers are not able to project the demand for such equipment which would require gas as the fuel and therefore their restricted availability leads to further less demand of gas by consumers.

iii. Inadequate availability of skilled manpower vis-à-vis the increasing demand is emerging as a serious constraint.

iv. Permissions and clearances from the authorities invariably get delayed.

There are a number of regulatory issues which come in the way of decision for going ahead with the project. Some of these issues are as follows:

a. Will the financial viability govern award of licence?

b. What would do the basis on which the licence area would be determined?

c. Will the commodity margins be disallowed?

d. What would be the period of exclusivity during which no other player will be allowed?

e. What would be the returns on the investment that are made for development of infrastructure?

A paper presented by MECON brought out a case study of implementation of CNG in Delhi for transport. And, in that context, it highlighted the problems and challenges for creating the infrastructure network in an existing city and particularly through areas which are thickly populated. Right-of-way problems become highly challenging to resolve and to proceed with the project.

While highlighting the CNG experience of Delhi, this presentation also brought out an interesting comparison between what has been achieved here in India and in Pakistan. India started this initiative in early 90's while Pakistan commenced its activities in mid 80's. So far, number of vehicles which use CNG in India is approximately 4 lacs while in Pakistan the corresponding number is 15.5 lacs. In India hardly 2.3% of vehicles use CNG while in Pakistan 25% of vehicles are on CNG. The reason for this large difference is because of the fact that Pakistan has been able to set-up and commission more than 1700 CNG stations while in India we have only 350 such stations.

The paper also highlighted the key factors which have contributed to the success story of Pakistan. These are:

i. The Government policy and directive for conversion of all official vehicles to CNG.

ii. Active CNG Associations which facilitate NOC's and licences.

iii. Exemption or reduction of import duty and sales tax on import of CNG refuelling and conversion equipment.

iv. Incentive for replacement of Diesel with CNG.

v. Encouraging importers to set-up indigenous manufacturing facilities for CNG equipment.

vi. Granting licences for setting-up compressor facilities.

Since the progress in Pakistan on this front has been significantly better than we have been able to achieve in India, it would be relevant to study the various initiatives put in place by them for an appropriate adaptation in our own country.

One of the papers presented emphasised the need for single switch energy usage which could include cooking, lighting, drying, feed stock, space cooling, steam, power and heating. Such an integration may be energy efficient but there are a number of interlinked issues which will have to be resolved.

One of the reasons that different forms of energy uses is not getting integrated is lack of availability of latest equipment which could use gas as the fuel and be more energy and environment efficient. Engines used in our transport system are not the only examples. Conversion of liquid fuel using engines in transport to engines which can use CNG comes with a cost. But on the ground of energy efficiency and more importantly in the interest of pollution control, the regulatory mechanism guides and directs such switch over. To what extent similar switching is possible in cases of other equipments and gadgets needs considerable amount of study and analysis.

The cost of the new technology also stands in the way of shift in usage pattern. Unless using the economies of the scale principle the number of such equipments and gadgets is increased, the required cost effective level will not be achieved.

In conclusion, some of the issues which will require more comprehensive examination to understand the challenges and issues involved in city gas distribution are as follows:

i. Allocation of natural gas for different segments of activities is crucial. Power sector advocates for increasing the present level of consumption on the ground of its multiplier effect on economy. Fertiliser brings out the strengths of its own argument. Other industries which also need energy explain their own prospectives. The desirability of substantial enlargement in the level of customer penetration on piped gas supply particularly to domestic consumers, small and medium enterprises and commercial establishments is an important consideration. Mere qualitative presentations and statements may not lead us to authentic and reliable conclusions. The issue requires a thorough quantitative analysis. The objective has to be the energy efficiency. Substitution of usage pattern leading to more efficient use of gas on the one hand, and implication of substitution when comprehensively and quantitatively analysed on the other, may lead us to a synthesisation of all the concerned issues and therefore may lead us to a reliable conclusion.

ii. The present regulatory framework in the gas sector is totally inadequate. Petroleum Regulatory Board, unless it is empowered to cover both upstream and downstream gas, cannot be in a position to evolve and implement a holistic approach. If upstream gas is left to market forces, the present market being totally imperfect in view of serious mismatches between demand and supply and hardly any trace of competition, there would be a totally arbitrary price for upstream gas and regulation at downstream will lose its meaning in view of a given price of upstream gas. Petroleum Regulatory Board must have enlarged function, responsibility and commensurate authority.

iii. There is always a paradox of infrastructure first or demand first. Infrastructure developers quite often become victim of an inadequate demand syndrome. They feel that if they invest, the infrastructure is not fully utilised in the short term and therefore is not able to yield the acceptable return. And, therefore they need to wait till such a neutral point (or end point) is reached. They fail to recognise a basic fundamental that in case of infrastructure, in fact its availability leads to more demand. On balance therefore it is highly recommended that projecting the future (and not the present demand), the development of infrastructure must be taken up rather than waiting for achievement of a level of demands which can justify the investment. There are any number of examples when initiatives were taken keeping this principle in mind, initially the infrastructure remained comparatively under-

utilised but soon their utilisation became so high that not only the short falls of the past were made up but continuing increase in demands yielded good financial results, and in fact, the infrastructure required further expansions. This principle will continue to hold good, in Indian context, for several years till we reach reasonably good levels of infrastructure in power, transport, ports, highways, railways, airports etc. They all need massive expansions and developers are bound to benefit in the medium and long terms, even though, in the short term, some of them may remain somewhat under-utilised in initial years.

Copyright : R.V. SHAHI