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Push for piped gas, CNG

business Updated: Feb 08, 2009 22:12 IST
Anupama Airy

No more heavy and clumsy cylinders for kitchens. Supply of piped gas to households and CNG (compressed natural gas) to vehicles is all set to get a fillip with the government deciding to more than double the current allocation of natural gas for residential and transport sectors.

“It has been decided that out of the first 40 million standard cubic metres gas per day (MMSCMD) to be produced from the KG-D6 block of Reliance Industries Ltd (RIL), 5 MMSCMD would be supplied for domestic and transport sector of city gas distribution (CGD) entities,” a petroleum ministry letter to major CGD players said.

So far, it was not clear whether the 5 MMSCMD gas allocated for the two sectors would come from the first or the second phase of gas production from KG-D6 block.

“We have already written to CGD entities, seeking details of their month-wise gas requirement of KG-D6 gas

starting June, 2009, for supply to the transport and residential sectors,” a senior ministry official said.

Currently, there are three major CGD entities in the country — Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL) and Gujarat Gas Co Ltd — which cover a handful of cities. These three companies are being together allocated close to 4 MMSCMD.

Following the government’s decision to allocate another 5 MMSCMD gas to CGD firms, the allocation for existing and upcoming CGD entities would more than double to 9 MMSCMD.

The process of expanding CGD networks in the country is already underway and the petroleum and natural gas regulatory board has already floated tenders for setting them up in six cities (see table), to be followed by 14. The government aims to roll out city gas networks in about 200 cities over the next five years.

Companies like state-owned gas utility GAIL, Gujarat Gas, MGL, Great Eastern Energy Co, IOC and Reliance Industries have already submitted expressions of interest (EoIs) for these cities.

The bids for these six cities involve an estimated investment of around Rs 2,400 crore, with an average investment of around Rs 400 crore per city for creating the required for pipeline and marketing infrastructure.