Bid & Tender
CGD Network Expects to Cover 70% of India’s Population by 2030

Date : Oct 21, 2021

Gas demand will continue to grow in India in the medium term buoyed by increasing coverage of the city gas distribution (CGD) network, according to analysts.

 

As much as 70% of the population is expected to come under the CGD network by 2030, up from 20-30% at present. Improving gas pipeline connectivity with the doubling of the network compared to the current 50% utilization, an estimated 15% growth over two years in production of domestic gas, which is cheaper than liquefied natural gas (LNG) is expected to incentivize conversion to gas from fossil fuels. “With the completion of expansion of CGD network bid out during round 9 and 10, we expect population coverage to increase to 71% from <20% levels in 2014. From an area perspective as well, coverage will likely go up to 53% from <10% levels in 2014," said HSBC.

 

The Petroleum and Natural Gas Regulatory Board (PNGRB) is working on its 11th bidding round with the aim of covering 300 districts, which will increase the reach to the entire population, it said.

 

Within the CGD network, expansion in domestic piped natural gas (PNG) connections and increase in gas usage as transportation fuel through compressed natural gas (CNG) looks more promising.

 

Over the last eight years, India’s natural gas demand has largely remained stagnant. However, gas consumed by CGD recorded a compound annual growth rate of 8% over FY11-21 to 25 million metric standard cubic metres per day (mmscmd), boosting its share to 16% of India’s total gas demand from 9% in FY12.

 

Crisil Ratings predicts sales volume of CNG and PNG to surge 25-27% this fiscal, driven by a recovery in vehicular mobility and industrial activity, as well as a strong price advantage of gas, compared with competing fuels such as petrol, diesel, and furnace oil.

 

The growth will help city gas distributors sustain robust operating margins of 28%, even as higher LNG prices are partly absorbed to cushion the impact on consumers.

 

Last fiscal saw city gas volumes contract 13% as both demand for CNG and industrial PNG, which together contribute 90% of total city gas consumption, were hard hit by the pandemic, especially in the first quarter.