Abandoning LPG for natural gas in Saurashtra-Kutch

Vol 11, PW 18 (24 Jan 08) Midstream & Downstream

GSPC Gas, the retail arm of state-owned GSPC, is targeting the untapped markets of Gujarat’s remote Saurashtra-Kutch region.

Over the next five years company officials tell PETROWATCH that GSPC Gas hopes to be delivering piped natural gas to around 200,000 households, more than 1000 factories and selling CNG to cars and buses from some 20 roadside stations. Work in Rajkot, the region’s â€کgateway’ and largest city with a population of 1.5m, is critical to the company’s expansion into Gujarat’s hinterland, where it enjoys near monopoly advantage with no competition from rival CGD operators BG-owned Gujarat Gas, Adani Energy or others.

In Rajkot, GSPC Gas expects to connect more than 1000 households with direct supplies of cooking gas by March 2008. In September last year chief minister Narendra Modi inaugurated the company’s first â€کmother’ CNG station in the city on National Highway 8B and a City Gas Distribution network today supplies 30,000 cm/d to households, factories and other commercial establishments.

In the city’s â€کold’ quarter, GSPC Gas is supplying gas for cooking to households in the Alka Park Society, Prajapati Nagar, Sitaram Society, Raghuveer Park, Ranchodwadi and Narayan Nagar areas. “Piped natural gas means a hassle-free supply,â€‌ housewife Ramila Kotak tells a PETROWATCH correspondent.

“It’s a better option than (LPG) cylinders, and cheaper.â€‌ GSPC Gas charges consumers around Rs13.74 per cubic metre for natural gas compared to Rs22.54 per kg for LPG charged by state-owned marketing companies.

On a â€کlike-for-like’ basis, assuming one LPG cylinder is used per month per household, this translates into a monthly saving of Rs90 on gas bills. Although small, GSPC Gas believes the saving is enough for it to capture 13% of the domestic cooking fuel market in the Saurashtra-Kutch region over the next five years.

Around 1.5m households use LPG as cooking fuel in Saurashtra-Kutch, with Indian Oil supplying 1m households; BPCL supplies 250,000 households; Reliance supplies 150,000; and SHV Energy of Holland supplies 100,000. Expect many of these to switch to piped natural gas.