Delhi-based Indraprastha Gas Ltd (IGL) is looking to increase the share of pressurised natural gas (PNG) business in its revenue pie.
Going beyond households, the firm looks at industrial units
KOLKATA: Delhi-based Indraprastha Gas Ltd (IGL) is looking to increase the share of pressurised natural gas (PNG) business in its revenue pie.
The company is focusing on small and large industrial customers around the National Capital Region, apart from households.
The Rs 1,200 crore company plans to invest Rs 400 crore over the next three years for expanding into new geographies and strengthening its compressed natural gas (CNG) and PNG infrastructure in Delhi.
It is looking at conversion of 2,500 private vehicles per month to drive growth.
In a recent notification, the Delhi Government has made it mandatory for all light goods vehicles (LGVs) registered in Delhi after July 2006 to be on CNG only.
Buses and three-wheelers are on CNG already. Roughly 4,000 LGVs are registered every year.
IGL is a joint venture of GAIL, BPCL and the Delhi government. Incorporated in 1998, it has pioneered the commercialisation of CNG for the automotive sector in Delhi.
IGL has chalked out plans for expanding into Greater Noida, Ghaziabad, Panipat and Sonipat. It had received land and regulatory approval in Greater Noida and is in the process of setting up three CNG stations.
With an eye on the Commonwealth games in 2010, IGL plans to add 10 CNG stations to the current 148. The company expects to add 3 stations over the next financial year.
Meanwhile, the government is strengthening the transport infrastructure by introducing radio taxis and high capacity buses, which would run on CNG.
Repeated attempts to reach the company’s managing director Om Narayan failed, and an email query remained unanswered for a week.
Analysts Niraj Mansingka and Adarsh Parasrampuria at Edelweiss Securities Ltd said in a note on July 31, 2007 that a fall in crude prices or decrease in duties on petroleum products could impact CNG demand as auto fuels could be relatively more competitive compared with CNG.
The analysts expect a 10% increase in CNG volumes in FY08; given the robust private vehicle conversion, assuming 3,000 conversions per month for this fiscal.
Industry experts said, being the sole provider of CNG to the public transport sector in the region, IGL would greatly benefit from this additional demand stemming from the Commonwealth Games.
Moreover, CNG vehicles have grown at a CAGR of 32% over FY01-06.
This growth has been accentuated by the fact that during the same period, crude prices have more than tripled, thereby favouring conversion of vehicles to CNG for deriving cost benefit.
This cost advantage is also encouraging owners of private vehicles to convert to CNG.
According to an estimate, CNG vehicles would grow from 106,000 vehicles in FY06 to 150,000 in FY09, a 13% CAGR. On the other hand, one million vehicles in the transportation segment would be CNG driven, thereby generating a total demand of 6.6 mmscmd of CNG by 2012.
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