Critical Analysis of forthcoming City Gas Distribution Projects under PNGRB bidding and its impact on RLNG sector in India: Phase I

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Cecilia McGee
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Analysis of forthcoming City Gas Distribution projects under PNGRB Bidding and its

1 IMaCS Research & Analytics Critical Analysis of forthcoming City Gas Distribution Projects under PNGRB bidding ICRA Management Consulting Services Limited Critical Analysis of forthcoming City Gas Distribution projects under PNGRB Bidding and its impact on RLNG sector in India: Phase I of II (23 out of 51 CGD Projects) 1

2 Contact: Sunil Varma Marri Head-Energy Practice Telephone: Mobile: Salim Abdi Manager-Energy Practice Telephone: Mobile:

3 Background With an aim to push for clean fuel in the country, the incumbent government is pushing for growth in gas pipeline infrastructure and City Gas Distribution. Presently, the gas transportation pipeline length stands at 15,808 km and the government has set an ambitious target of building additional 15,000 km of gas pipeline under the national gas grid mission. While the development of a national gas pipeline grid is critical in terms of having a seamless connectivity across the country but the price sensitivity of end-user market and constraints in availability of natural gas is creating an adverse impact on the commercial viability of these projects. The government has recently announced its intent to quadruple the existing piped cooking gas connectivity from the level of nearly 26.7 lakh households to nearly 1 crore by While pushing for a clean alternative the government is also hoping to gain on its efforts of reducing the excessive burden on the subsidized domestic LPG which has been impacting the margins of refineries in the country. However, the change in approach for arriving at a notified geographical area which is presently demarcated on a district level and the Minimum Work Plan (MWP) obligation has not gone down well with the existing and aspiring CGD players. The thrust in the PNG connections essentially require a significant growth in CGD network in the next two years. PNGRB has identified a total of 51 geographical areas which it may announce in the subsequent rounds of bidding based on the increase in gas pipeline connectivity in vicinity of these regions. IMaCS intends to carry out a critical analysis of the 51 geographical areas identified by PNGRB in a phased manner. The report will also provide a high-level perspective on the impact on the RLNG sector driven by growth in CGD sector in India. The first phase of the report would cover 23 geographical areas and the remaining geographical areas would be covered in the second phase. The list of 23 geographical areas is given in Exhibit 1. Exhibit 1 List of GAs expected in next round of bidding (Phase-I) # Geographical Area State # Geographical Area State 1. North Goa Goa 13 Bhatinda Punjab 2 Amreli Gujarat 14 Rupnagar Punjab 3 Patan Gujarat 15 Fatehgarh Saheb Punjab 4 Bhiwani Haryana 16 Saharanpur Uttar Pradesh 5 Yamunanagar Haryana 17 Raibarielly Uttar Pradesh 6 Rewari Haryana 18 Mainpuri Uttar Pradesh 7 Ambala Haryana 19 Auraiya Uttar Pradesh 8 Rohtak Haryana 20 Baghpat Uttar Pradesh 3

4 # Geographical Area State # Geographical Area State 9 Kurukshetra Haryana 21 Etawah Uttar Pradesh 10 Ratnagiri Maharashtra 22 Amethi Uttar Pradesh 11 Solapur Maharashtra 23 Hapur Uttar Pradesh 12 Kolhapur Maharashtra In the context of the above discussed opportunity, IMaCS is pleased to launch its outlook report titled, Critical Analysis of forthcoming City Gas Distribution Projects under PNGRB Bidding and its impact on RLNG sector in India. Study Highlights The report provides an analysis of recently conducted bidding in CGD to understand the competitiveness and interest in downstream gas business. The report evaluate the GAs as identified by PNGRB on critical areas such as end-user market profile, gas transportation pipeline connectivity, urban-rural distribution, industrial development/corridor, key industrial pockets/clusters and geographical terrain The report also brings out the likely impact on the RLNG sector due to growth in CGD project. Further, a broad outlook on the infrastructure and capital requirement of the CGD projects is provided for the 23 GAs under phase-i of the report. Table of Contents Executive Summary 1. Introduction 1.1. Background 1.2. Key Assumptions 2. Natural Gas Demand-Supply 2.1. Current and expected gas demand by Current and evolving domestic gas availability by Demand Supply Gap analysis 3. Natural Gas Infrastructure 3.1. Existing and evolving status of gas transportation pipelines: cross country, gas grid and trans-national 3.2. RLNG Terminals: Existing, Planned and Proposed 3.3. Existing, Upcoming and Identified City Gas Distribution Projects 4

5 4. New and Upcoming Natural Gas Transportation Pipeline 4.1. Gas Transportation Pipelines already announced and authorized for implementation 4.2. Gas Transportation Pipelines proposed and in EoI stage 4.3. Gas Transportation Pipelines likely to be proposed under VGF route 4.4. High-level perspective on the capital requirement for the pipelines 5. Key Features of CGD Bidding 5.1. Outlook on prevailing PNGRB bidding process: Guidelines, Bidding Parameters and MWP 5.2. High-level analysis of 4 th round CGD bidding including lessons learned 5.3. Outlining the key issues raised by the bidders in previous rounds of bidding 5.4. Mapping of CGD projects likely expected in the round-6 bidding 6. Analysis of tentative CGD projects likely in the next round on project-wise basis 6.1. High-level analysis of CGD projects based on: Population in the district and urban-rural distribution Outlook on industrial development in the region Connectivity to gas pipeline and source of gas Proximity to nearby CGD project High-level outlook on end-user profile High-level mapping of demand clusters or key industrial areas Outlook on geographical terrain 6.2. High-level assessment of potential natural gas demand for identified CGD projects based on existing benchmarks 6.3. High-level assessment of PNG and CNG infrastructure required for identified CGD projects based on a thumb-rule basis and as per the MWP of PNGRB 6.4. High-level assessment of capital requirement for PNG and CNG infrastructure required for identified CGD projects based on a thumb-rule basis 6.5. SWOT analysis for the identified CGD projects 7. High-level analysis of impact of CGD projects on RLNG sector 7.1. Identifying existing and planned RLNG terminals that may cater to the CGD projects 7.2. Outlook on the existing and expected gas pipeline connectivity between RLNG terminal and CGD projects 8. Summary 5

6 Deliverables One PDF copy of the entire report ed to the registered subscriber (single point of contact). Who will benefit from this study and why? # Key stakeholders Value proposition 1. Bidders/CGD Entities The report helps bidder understand the end-user market potential and capital implications for each of the 23 GAs identified by PNGRB 2. OEMs The report help OEM companies related to gas pipeline, CNG compressor, Metering and Skid and CNG kit to understand the emerging market potential 3. Gas Suppliers The report help gas suppliers understand the emerging demand potential segmented in CGD 4. Gas Pipeline/ RLNG Terminal Players The report is a crucial input for gas pipeline and RLNG terminal companies as CGD is an important demand centre 5. Investors/Banks/Lenders Gain comprehensive insight to carry out risk and gain assessment before making an investment decision Additional Consulting Enquiry (Optional) IMaCS would be willing to undertake Consulting Engagements for interested Clients in areas, such as: 1. Market Assessment of CGD Geographical Areas and Natural Gas Transportation Pipelines 2. Preparation of Detailed Feasibility Report and Bid Advisory assistance for CGD and Natural Gas Transportation Pipeline Projects 3. Strategic Market Assessment for RLNG for a region/state Subscription To book a copy of the report, Critical Analysis of forthcoming City Gas Distribution Projects under PNGRB bidding, please contact: 1. Mr. Salim Abdi, Manager-Energy Practice (Telephone: , Mobile: , salim.abdi@imacs.in ) 2. Mr. Sunil Varma Marri, Head-Energy Practice (Telephone: , Mobile: , sunil.marri@imacs.in). 6

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