Private players in the energy sector would have to wait longer to set up compressed natural gas (CNG) retail outlets on highways, similar to the 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, which is working on a policy framework to grant marketing rights for CNG as transportation fuel to private firms, has faced roadblocks. “There are some legal issues that needs to be sorted out before finalising the policy,” a senior government official privy to the development told FE. The official did not divulge the legal hurdles the government has come across.
The strategy for launching CNG retail stations at highways is to attract private investment and offer a platform for a competitive market. The ministry has already received comments from the industry. In order to attract investment, the ministry, in a draft proposal, 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.
The government also mooted specifying a few CNG corridors in the vicinity of pipeline networks. With the development of the national gas grid, the petroleum ministry feels, the ‘CNG corridor’ could be developed on the national and state highways.
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. In addition, firms setting up these fuel pumps 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 UTs 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. CNG-propelled vehicles are mostly concentrated in the NCR, Mumbai, Agra, Kanpur, Lucknow, Ahmedabad and Pune.