Finding customers for CNG supply to Vijayawada

Vol 8, PW 23 (23 Feb 05) Midstream & Downstream

Bhagyanagar Gas is in a curious position.

By June this year the Hyderabad-based city gas distribution JV between GAIL and Hindustan Petroleum will be ready to supply CNG to Vijayawada but wont have any customers. We dont have the benefit of a Supreme Court order telling local transport agencies to switch to CNG, the company tells us.

Mahanagar Gas and Indraprastha Gas both benefited from a Supreme Court order ordering local taxis and buses to switch to CNG. In Vijayawada, construction of one mother CNG station at Vidyadharapuram and three daughter stations in existing Hindustan Petroleum petrol pumps at Ajit Singh Nagar, Benz Circle and Ramavarapadu is underway.

Our suppliers for the compressors, dispensers and other equipment have been given a deadline to deliver by end of April, we learn. By June the stations will be ready.

Bhagyanagar Gas is confident that the Gas Linkage Committee in Delhi will confirm its request for a firm allocation of 100, 000 cm/d gas for its CNG and PNG operations in Vijayawada. GAIL is constructing a 12-km feeder pipeline from the Lanco thermal power station to deliver gas direct to Vijayawada.

But, admits the company: We have no guarantee of any CNG customers. Bhagyanagar Gas has committed Rs57cr ($13m) to its CNG and piped natural gas infrastructure in Vijayawada.

Yet the lack of any visible CNG market isnt deterring company management. We cant invest Rs57cr and wait for customers! adds the company.

We have to create customers. One innovative solution under review is to fund the conversion of 19,000 buses belonging to the Andhra Pradesh Road Transport Corporation through soft loans.