IGL to boost CAPEX to meet new CGD target

Vol 18, PW 1 (28 Aug 14) Midstream & Downstream

Despite promising the oil ministry on August 19 that it will add 150,000 new households to its city gas network this year, Indraprastha Gas’s (IGL) existing business plan is still based on achieving just 65,000 new connections.

Local BJP MPs eyeing upcoming local elections and oil minister Dharmendra Pradhan are putting pressure on IGL to rapidly increase the number of household connections, calling for IGL to double its total household gas connections this fiscal from 459,467 at present to nearly a million. But in reality IGL’s approved CAPEX plans outline just 15% growth this year in household connections.

“Any new targets will take time to work into a revised business plan,” says a company spokesman. IGL currently plans to invest Rs300cr ($50m) by March 31, 2015 in Delhi and the Delhi satellite towns of Ghaziabad and Greater Noida.

Another IGL source says it will add 50-km of steel pipeline and 750-km of Medium Density Polyethylene (MDPE) pipeline and set up nine standalone CNG stations and two CNG dispensers at stations owned by other oil companies. Bharat Petroleum and GAIL joint venture IGL will lay the pipelines along National Highway 24 and National Highway 91 to connect housing colonies in Delhi and factories in industrial hub Ghaziabad.

In 2013-14, IGL added 73,000 households against its internal target of 65,000 households.

IGL’s turnover in 2013-14 was Rs4328cr ($715m), a 16% rise over the previous year. No forecast can be made for the current year because of uncertainty over domestic gas pricing which could also affect IGL’s CAPEX for 2014-15 in the CNG sector. IGL’s CNG sales growth in 2013-14 was lacklustre at just 2%. Blame poor growth on state-owned Delhi Transport Corporation (DTC) which was meant to add 1100 new public transport buses using CNG last year but hardly added any. This year DTC is expected to add 1400 new CNG-fuelled buses. Meanwhile, IGL expects growth in piped gas sales to factories and businesses to be around 8% this year - up from 7% in 2013-14. IGL expects to add 500 new customers to the 1862 industrial and commercial customers it had on March 31, 2014. Most future growth will be in industrial hubs Ghaziabad and Greater Noida as growth has almost peaked in Delhi. IGL sells 3.79m cm/d of gas. Of this 80% is domestic gas supplied as CNG and piped gas to households; 13% to 14% is R-LNG to factories and businesses; the rest goes to gas retailer Adani Gas in Faridabad and Haryana City Gas in Gurgaon.

IGL to boost CAPEX to meet new CGD target

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