City gas companies need to boost CNG adoption: IGL MD -

City gas companies need to boost CNG adoption: IGL MD

City gas companies will have to shift their focus away from profit margins to sales volume to accelerate the CNG vehicle adoption and overall consumption of natural gas in the country, said Kamal Kishore Chatiwal, managing director, Indraprastha Gas (IGL).

In an interview to ET, he said the government should evaluate subsidising piped natural gas (PNG) supplies for poor households to preserve its competitiveness with LPG, which is attracting expanding subsidies in different states ahead of upcoming polls.

“There is a scope for city gas distributors to reduce CNG prices and focus on volumes for faster penetration of gas in the country,” said Chatiwal.

CNG prices should not be as high as they are in some areas, he said, adding that in some licensed areas CNG prices are close to diesel prices.

“There are two advantages associated with CNG – environmental and economic. Until the economic benefit is realised by the people, they won’t convert to CNG,” said Chatiwal.

About 15-17,000 vehicles convert to CNG every month in the areas IGL operates in. “IGL’s philosophy has been to focus on volumes,” said Chatiwal, adding that higher volume ensures increased revenue and higher profit even if the margins shrink a bit.The government allocates cheaper domestic gas to city gas companies, which compress it and sell it to CNG vehicle drivers at market price. City gas players’ fat margins have triggered a debate on whether CNG prices should be capped.”I don’t have the power to fix (CNG) prices. But if the government is giving them (domestic gas) at a particularly cheaper price, I have a feeling that the government could examine whether it also has the remit to demand what could be the end consumer price for CNG,” Petroleum and Natural Gas Regulatory Board chairman Anil Jain told ET last week.

High taxes and exorbitant lease rentals for the dispensing sites in some states have also contributed to increased CNG prices, said Pawan Kumar, director (commercial) at IGL.

Curbs on diesel buses coming from neighbouring states to Delhi due to high air pollution presents an opportunity for IGL, said Chatiwal. There are about 2,000 diesel buses, which come to Delhi from neighbouring states. And if these buses convert to CNG, their operating cost would fall, he said, adding that the conversion cost of about Rs 4-5 lakh for each bus can be recovered in less than a year. Many of these buses originate or cross the areas in which IGL operates its CNG stations and, therefore, can lead to a revenue boost for the company.

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