Using the Taj Mahal as an excuse to get subsidised gas

Vol 10, PW 9 (24 Aug 06) Midstream & Downstream

GAIL has complained to the oil ministry over the shortfall of subsidised APM (Administered Pricing Mechanism) gas for CNG sales in Agra, home of the Taj Mahal, one of the Seven Wonders of the World.

GAIL made its feelings clear in a sharp letter to the oil ministry on 6th July, with a warning that the Taj would suffer more environmental damage given the increasing vehicular pollution in Agra unless Green Gas Ltd, its City Gas Distribution joint venture with Indian Oil in the fabled city, is allocated more APM gas on a priority basis. So bad is the shortfall, says GAIL, that Green Gas has begun diverting gas supplies intended for Lucknow to Agra.

Green Gas has been allocated 1.1m cm/d by the oil ministrys Gas Linkage Committee for Agra and nearby Ferozabad and 100,000 cm/d each for Kanpur and Lucknow. Contacted by PETROWATCH, a source in Agra confirms that all the APM gas allocated to Green Gas for the city is being supplied to industrial and commercial users, leaving little left over for CNG.

This shortfall is leaving Green Gas with little option but to convert costly R-LNG into CNG and pass on the price difference to angry consumers. See it this way, says a source, I am selling CNG at Rs28/kg.

If a customer comes to me from Delhi where CNG costs Rs19/kg, do you think he is going to be happy Why should there be so much disparity in price Three months ago Green Gas commissioned its first mother CNG station in Agra and plans to open two daughter stations by mid-September. Sales are presently around 1800-kg per day but this is rising sharply and the company expects demand to increase to 2000-kg per day by next month.

In two or three years, adds our source, CNG demand in Agra will go as high as 30,000-kg per day. Green Gas believes it is not possible to charge CNG indefinitely at the equivalent price of R-LNG.

By selling gas at the R-LNG price, we hear, Green Gas can not even recover the capital cost of setting up a CNG station. Each station costs anywhere between Rs5cr-6cr to construct.