Lack of pricing power, competition to hit city gas distribution firms

The city gas distribution (CGD) sector has enjoyed favourable policies, high arbitrage versus alternative fuels, and pricing freedom in the past. However, recent cuts in administered pricing mechanism (APM) allocation and rising competition from electric vehicles are among the factors that have led to big corrections.

- DEVANGSHU DATTA

The policy vision is to have a 15 per cent share of the energy basket for gas (from 6 per cent), raising gas consumption to 500 million metric standard cubic meters per day (mmscmd) by 2030 (currently 200 mmscmd). There are 307 CGDs covering almost 100 per cent of the population. Compared with 800 compressed natural gas (CNG) stations in 2014, CNG stations have increased 9 times to over 7,200 now. Domestic piped natural gas (PNG) connections are up 5 times to 13.6 million. Targets are aggressive with up to 18,000 CNG stations (2.5 times from current levels) and 126 million (8 times more) domestic PNG connections by 2032.