Exclusive | After universal LPG penetration, India plans to cover 100% population under city gas network

After achieving nearly 100 percent penetration of liquefied petroleum gas (LPG), India is planning to cover its entire geographical area under the city gas distribution (CGD) coverage, up from 70 percent of the population now.

The Petroleum and Natural Gas Regulatory Board (PNGRB) is likely to come out with the eleventh round of CGD bidding within the next six months, which will cover over 300 districts and may have an estimated investment of Rs 1.2 lakh crore.

"Earlier, the plan was to cover 44 geographical areas (GAs) in 120 districts in the eleventh round. However, we are now working on a fresh proposal that will cover the entire country in one go. This would mean 300 plus districts will be covered in a single round of bidding and the CGD network reach will increase to 100 per cent of the population," said a source close to the development.

The move is likely to be a catalyst in achieving India's target of raising the share of natural gas in its energy basket from 6.3 per cent now to 15 per cent by 2030.

After the ninth and tenth round of bidding, CGD coverage in the country was extended to 406 districts. The next round is likely to cover another 335 districts.

"Each district may see an investment of around Rs 400 crore, which could lead to a total investment of around Rs 1.2-1.4 lakh crore in the upcoming round," the source said.

This is compared to a committed investment of Rs 70,000 crore in the ninth round and Rs 50,000 crore in the tenth round that took place in 2018 and 2019, respectively.

At present, PNGRB has only one member, and once the quorum is complete, the board is likely to take up this proposal.

Under the ninth and tenth round of bidding, state-run Indian Oil Corporation and Gautam Adani-led Adani Gas won the maximum number of geographical areas, winning 17 and 15 GAs respectively.

Other major players who clinched several GAs in these two rounds include Bharat Gas, Torrent Gas, a consortium of AG&P LNG Marketing & Atlantic Gulf & Pacific Company, IOC-Adani consortium, Gail Gas and Gujarat Gas.

The ninth round covered 86 GAs and 174 districts, while the tenth round had 50 GAs and 124 districts.

Interestingly, the CGD network covered only 20 per cent of the country's population in 2014, which increased to 70 per cent after the award of the tenth round.

India has lined up plans to expand its natural gas grid to 34,500 km, by adding another 17,000 km of gas pipeline.

Covering the entire country under CGD in the next round means operators will be able to immediately start supplying piped natural gas (PNG) and compressed natural gas (CNG) to the remaining geographical area immediately after the pipeline network gets operational.

Said Prashant Vasisht, Vice-President, Corporate Ratings, ICRA: "I believe that companies may be aggressively looking at the new areas, which will be up for grabs. This is because the incumbents are making healthy returns. However, companies like GAIL will have to come up with pipelines in tandem, to ensure gas connectivity to the new areas."

The plan to extend the reach of the CGD network across the country is coming after raising the LPG coverage from 61.9 per cent in 2016 to 99.5 per cent in 2021, owing to the success of Pradhan Mantri Ujjwala Yojana (PMUY), the scheme that provided free cooking gas connections to poor households.