Responding to environmental concerns, the government has vowed to raise the share of natural gas in the overall energy basket to 15% by 2030 from 6.5% in 2015. The Petroleum and Natural Gas Regulatory Board (PNGRB) has been given the responsibility of developing gas distribution networks in the country, providing a boost for city gas distribution companies.
Recently, the ninth round of licence distribution saw 86 licences being awarded for selling CNG and piped cooking gas in 174 districts across 22 states. The next round will cover over 124 districts in 14 states, thereby ensuring CNG and piped cooking gas connections for 70% of the population.
According to a report by Bloomberg Intelligence, demand for natural gas in India will get a boost from the government’s plans to revitalise more than 10,000 kilometres of gas pipelines. Sale of gas in cities for cooking, fueling vehicles and as a substitute for furnace oil is bound to grow rapidly as pipeline networks expand. The report states that such developments will set the ground for exponential growth in the city gas distribution business.
City gas distribution companies distribute natural gas to end-consumers as fuel to power vehicles in the form of Compressed Natural Gas or CNG, and for cooking in the form of Piped Natural Gas or PNG. There are four listed city gas distribution companies that are likely to benefit from the network expansion. Solid distribution pipeline network and gas procurement contracts with upstream players like GAIL and Petronet LNG will be the primary growth drivers for these companies.
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