Indraprastha Gas Limited (IGL) has decided to meet additional natural gas demand from imported liquefied natural gas (LNG) because it does not expect any new allocation of domestic gas for the next three years. Rajesh Vedvyas, MD of IGL, talks about company's growth plans in an interview with Siddhartha P Saikia Excerpts:
Is your business affected by dip in the domestic gas output?
No, for our requirement of additional gas to meet incremental demand, we are dependent on LNG. Less supply from domestic field doesn't impact our business. We are not going to get any deemed domestic gas in next three years and, accordingly, planned our operations.
How much is your current demand and where are you sourcing it from?
Currently, our demand is 3.3 mmscmd. Out of this, 2.2 mmscmd is gas from administered price mechanism (APM); 0.15 mmscmd is from KG basin and rest is LNG.
How much do you see your demand growing in next three years? How big is your present customer base?
We see our gas demand going upto 4.5 mmsmcd in next three years. Out of this, 2.2 mmscmd would be APM gas, while rest would be LNG. For piped cooking gas, there are nearly 2,000,000 potential customers in Delhi. In the next five years, we could cover a total of 500,000 new customers. The CNG users are growing at the rate of 14-15 per cent year-on-year. Currently, we supply piped cooking gas to nearly 260,000 customers in Delhi, Noida, Greater Noida and Ghaziabad.
Which are the new cities where you have bid for third round of piped natural gas distribution? How much investment would it require?
We have submitted bids for Jalandhar and Ludhiana. The investment in Jalandhar would be nearly Rs 500 800 crore, while it would be close to Rs 1,000 crore for Ludhiana. We are of the view that cities that have more than 80 per cent of customers make good business sense.
Do you think bidding is the right way to expand city-gas distribution network?
The first round by PNGRB was successful. The Supreme Court quashed the second round. And we don't know when the results for the third round would be declared. We have apprised PNGRB that the bidding process has loopholes, which they must plug. Bidding is not the right way to go for expansion of city-gas distribution network. Rather, there should be few empanelled companies whom the regulator (PNGRB) should allow to lay pipelines through a selection process.
Where is the growth for IGL if you do not get the opportunity to lay network in new cities?
We have our hands full for next five years in the cities where we have our network. Even if no new cities were allotted, it would not impact our growth.
How do you plan to raise funds?
Last year, we raised Rs 350 crore with Axis Bank as the lead arranger of the loan. In the current financial year, we will raise around Rs 300 crore, where HDFC Bank is the lead arranger.
Do you plan to set up a LNG terminal?
IGL is fortunate in having strong promoters in Gail and BPCL and is quite comfortable about LNG sourcing. However, we do not rule out any direct term contracts with the shippers in future.
Is your business affected by dip in the domestic gas output?
No, for our requirement of additional gas to meet incremental demand, we are dependent on LNG. Less supply from domestic field doesn't impact our business. We are not going to get any deemed domestic gas in next three years and, accordingly, planned our operations.
How much is your current demand and where are you sourcing it from?
Currently, our demand is 3.3 mmscmd. Out of this, 2.2 mmscmd is gas from administered price mechanism (APM); 0.15 mmscmd is from KG basin and rest is LNG.
How much do you see your demand growing in next three years? How big is your present customer base?
We see our gas demand going upto 4.5 mmsmcd in next three years. Out of this, 2.2 mmscmd would be APM gas, while rest would be LNG. For piped cooking gas, there are nearly 2,000,000 potential customers in Delhi. In the next five years, we could cover a total of 500,000 new customers. The CNG users are growing at the rate of 14-15 per cent year-on-year. Currently, we supply piped cooking gas to nearly 260,000 customers in Delhi, Noida, Greater Noida and Ghaziabad.
Which are the new cities where you have bid for third round of piped natural gas distribution? How much investment would it require?
We have submitted bids for Jalandhar and Ludhiana. The investment in Jalandhar would be nearly Rs 500 800 crore, while it would be close to Rs 1,000 crore for Ludhiana. We are of the view that cities that have more than 80 per cent of customers make good business sense.
Do you think bidding is the right way to expand city-gas distribution network?
The first round by PNGRB was successful. The Supreme Court quashed the second round. And we don't know when the results for the third round would be declared. We have apprised PNGRB that the bidding process has loopholes, which they must plug. Bidding is not the right way to go for expansion of city-gas distribution network. Rather, there should be few empanelled companies whom the regulator (PNGRB) should allow to lay pipelines through a selection process.
Where is the growth for IGL if you do not get the opportunity to lay network in new cities?
We have our hands full for next five years in the cities where we have our network. Even if no new cities were allotted, it would not impact our growth.
How do you plan to raise funds?
Last year, we raised Rs 350 crore with Axis Bank as the lead arranger of the loan. In the current financial year, we will raise around Rs 300 crore, where HDFC Bank is the lead arranger.
Do you plan to set up a LNG terminal?
IGL is fortunate in having strong promoters in Gail and BPCL and is quite comfortable about LNG sourcing. However, we do not rule out any direct term contracts with the shippers in future.
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