RIL gets govt nod for piped gas deals
Reliance Industries, which recently began gas production off the east coast, has got the government go-ahead to sign agreements with firms supplying the much-needed gas to households and car owners in major cities.
By Piyush Pandey, ET Bureau |
MUMBAI: Reliance Industries, which recently began gas production off the east coast, has got the government go-ahead to sign agreements with firms supplying the much-needed gas to households and car owners in major cities. The government approved the allocation of gas from RIL���s Krishna-Godavari basin to half-a-dozen city gas distribution firms (CGD) in Delhi, Mumbai, Ahmedabad, Gandhinagar, Agra, Indore and Ujjain. In a letter written on May 13, the petroleum ministry instructed RIL to execute gas sales agreements with these firms. ET has a copy of the letter.
The development is hugely significant for a number of reasons. Natural gas used in a compressed form or supplied to homes through pipes is a far cheaper alternative than LPG, diesel or petrol. For instance, it will cost a housewife Rs 325-350 to buy an LPG cylinder whereas piped natural gas (PNG) is about 25-30% cheaper. Poor gas availability has so far restricted the usage of PNG and CNG usage to a few million homes and to a few retail outlets in Mumbai and Delhi.
The government���s decision is expected to change all that. Distribution firms such as Mahanagar Gas in Mumbai and Indraprastha Gas in Delhi will be able to add more consumers and generate more revenue once the gas becomes available. Commuters such as those who use buses or taxis and autorickshaws using CNG will benefit as transport costs drop. In Mumbai alone, over 10-lakh consumers are expected to switch over to PNG.
As per estimates, nearly 5-lakh vehicles use CNG in India, the world���s fourth-largest CNG market. This number is also expected to increase. ���PNG will help the consumer to save on fuel bills. The government will also be able to save on subsidy,��� said an analyst with an international research firm.
An RIL official confirmed the receipt of the letter. ���We have received the government approval for supply of 834,631 standard cubic meters per day of gas to six CGD entities with operations in dozen cities,��� he added. These entities include Mahanagar Gas, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and Hindustan Petroleum Corporation.
RIL is also expected to benefit in a big way.
With RIL���s gas flowing, Mahanagar Gas ��� India���s biggest city gas distributor ��� is in expansion mode to transport the gas from south Mumbai to suburbs such as Bhayander, Mira Road, Navi Mumbai and Thane. The company is investing over Rs 2,200 crore to lay the infrastructure and add new connections.
Others like GAIL, RIL, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and HPCL are also expanding their networks.
According to India���s natural gas mission, PNG will be given to 20 million people in five years. The government will further allocate another four million metric standard cubic meters per day (mmscmd) of gas to the CGD firms later.
The development is hugely significant for a number of reasons. Natural gas used in a compressed form or supplied to homes through pipes is a far cheaper alternative than LPG, diesel or petrol. For instance, it will cost a housewife Rs 325-350 to buy an LPG cylinder whereas piped natural gas (PNG) is about 25-30% cheaper. Poor gas availability has so far restricted the usage of PNG and CNG usage to a few million homes and to a few retail outlets in Mumbai and Delhi.
The government���s decision is expected to change all that. Distribution firms such as Mahanagar Gas in Mumbai and Indraprastha Gas in Delhi will be able to add more consumers and generate more revenue once the gas becomes available. Commuters such as those who use buses or taxis and autorickshaws using CNG will benefit as transport costs drop. In Mumbai alone, over 10-lakh consumers are expected to switch over to PNG.
As per estimates, nearly 5-lakh vehicles use CNG in India, the world���s fourth-largest CNG market. This number is also expected to increase. ���PNG will help the consumer to save on fuel bills. The government will also be able to save on subsidy,��� said an analyst with an international research firm.
An RIL official confirmed the receipt of the letter. ���We have received the government approval for supply of 834,631 standard cubic meters per day of gas to six CGD entities with operations in dozen cities,��� he added. These entities include Mahanagar Gas, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and Hindustan Petroleum Corporation.
RIL is also expected to benefit in a big way.
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The company is already selling natural gas to fertiliser and power firms and the addition of CGD firms will help increase its revenue and profitability. RIL shares fell 3.78% to Rs 2,150.95 on Wednesday. The shares have climbed 10.99% over the past week and 26.08% over the past month. India���s petroleum subsidy bill is pegged at nearly Rs 100,000 crore. Of this, nearly Rs 59,000 crore is for diesel, Rs 6,300 crore for petrol, Rs 16,000 crore for LPG and Rs 25,100 crore for kerosene.With RIL���s gas flowing, Mahanagar Gas ��� India���s biggest city gas distributor ��� is in expansion mode to transport the gas from south Mumbai to suburbs such as Bhayander, Mira Road, Navi Mumbai and Thane. The company is investing over Rs 2,200 crore to lay the infrastructure and add new connections.
Others like GAIL, RIL, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and HPCL are also expanding their networks.
According to India���s natural gas mission, PNG will be given to 20 million people in five years. The government will further allocate another four million metric standard cubic meters per day (mmscmd) of gas to the CGD firms later.
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