For the first time, private players in the energy sector such as Reliance Industries (RIL), BP, Essar Oil and Shell would get an opportunity to set up compressed natural gas (CNG) retail outlets on highways, similar to ones selling petrol and diesel. At present, CNG is available for transport only within cities and is sold by state-run city gas distribution (CGD) utilities.
The petroleum ministry is working on a policy framework to grant marketing rights for CNG as transportation fuel to private firms. “The strategy is to attract private investment and offer a platform for a competitive market,” a senior official working on the policy told FE. The ministry has already received comments from the industry and petroleum minister Dharmendra Pradhan would soon finalise the policy to be sent for the approval of the Prime Minister Narendra Modi-headed cabinet committee on economic affairs (CCEA).
The government is also contemplating specifying a few CNG corridors in the vicinity of pipeline networks, said another official. With the development of the national gas grid, the petroleum ministry feels, the ‘CNG corridor’ could be developed on the national and state highways.
In order to attract investment, the ministry has decided to lower the threshold investment limit to Rs 500 crore as against Rs 2,000 crore required for retail fuel stations. The firms would also be allowed to enter into their own arrangements with existing retail outlets for establishing and operating CNG facilities. At the same time, the players would be at liberty to set up greenfield CNG stations based on their own techno-economic considerations.
Private players would be entitled to set up and operate CNG stations either by themselves, or through joint venture partners or through the dealership model.
The allocation and supply of domestic gas for CNG segment would be according to government guidelines, said the first official, adding the firms would also be at liberty to arrange supplies of natural gas from market sources by themselves.
This indicates that pricing of CNG at retail pumps would be market-determined.
Currently, there are about 1,003 CNG retail pumps across 14 states and Union territories through more than 10 city gas distribution utilities including Indraprastha Gas, HPCL, Green Gas, Adani Gas, GAIL Gas, Avantika Gas, GSPC Gas, Bhagyanagar Gas, Mahananagar Gas and Vadodara gas, among others. CNG-propelled vehicles are mostly concentrated in the National Capital Region of Delhi, Mumbai, Agra, Kanpur, Lucknow, Ahmedabad and Pune.