Decision to give a big boost to City Gas Distribution Projects across India

Pro-rata cut on  gas supply to non priority sectors to meet CNG and PNG needs will not affect small users : Moily

With a view to further promote Compressed Natural Gas(CNG) vehicles and Piped Natural Gas(PNG) used in households, the Ministry of Petroleum and Natural Gas has decided to raise the share of domestic gas to 100 % of the requirement for CNG (transport) and PNG (domestic). This would lead to reduction in price of CNG (transport) and PNG (domestic) across the country (except in those City Gas Distribution(CGD) entities which are already getting 100% domestic gas).  Accordingly, the price of CNG (transport) in Delhi supplied by Indraprastha Gas Ltd (IGL) would reduce by about Rs 15 per kg (about 30%). There will also be a  reduction of about Rs 5/SCM (about 20%) in the price of PNG(domestic). The similar reductions in price of CNG and PNG will take place in other cities with city gas distribution projects.

Announcing the decision here today, Petroleum Minister Dr M Veerappa Moily said that the decision to raise the share of indigenously produced gas in the CNG (transport) and PNG (domestic) segments was not only guided by the health benefits on account of significantly lower levels of air pollution but also because of additional economic benefits that would accrue on account of reduced subsidy burden for the Government. Raising the share of domestic gas to 100% in the CNG (transport) and PNG (domestic) segments would also facilitate rapid growth of CNG usage all over the country.

The additional requirement of 1.92 MMSCMD of gas to raise the share from 80% to 100% is to be met by imposing pro-rata cuts in supplies of domestic gas (excluding NELP gas) to sectors other than the priority sectors. The sectors where gas supplies would be curtailed include Petrochemicals, Refineries, Steel, and entities using domestic gas for industrial or commercial purpose. Any future increase in demand for domestic gas from the CNG (transport) and PNG (domestic) sectors would be met by imposing further cuts on the non-priority sector and from the additional production of domestic gas, based on the allocation policy of the Government.

In order to insulate the small consumers of gas, it has been decided to exclude the first 5000 SCMD of gas from the purview of pro-rata cuts. This would mean that all customers consuming upto 5000 SCMD of gas would not be subjected to pro-rata cuts and in case of other small customers consuming upto 50,000 SCMD, pro-rata cuts would be applied only on the quantity consumed in excess of 5000 SCMD. The quantity of gas that had been cut in respect of small consumers of gas drawing less than 5000 SCMD of gas by virtue of the Ministry’s guidelines dated 14.11.2013 would also be restored.

CGD entities are expected to pass on the entire benefit due to increased supply of domestic gas to the consumers of CNG (transport) and PNG (domestic). The State Governments are also expected to lower/abolish the VAT as a step to pass on additional benefits to consumers across the country and to further promote usage of this environment friendly fuel.

The matter regarding increasing the share of domestic gas in the quantum of gas supplied to the City Gas Distribution(CGD) entities for meeting the requirement of CNG (transport) and PNG (domestic) has been under consideration of the Government for some time. On 14.11.2013, the Ministry of Petroleum and Natural Gas issued guidelines whichinteralia included raising the share of domestic gas to 80 % of the consumption level attained in the CNG (transport) and PNG (domestic) segment during 2012-13. The guidelines also provided for the same share of domestic gas at the same base price for all the CGD entities across the country; thereby removing the distortion where some CGD entities were getting upto 100% of domestic gas whereas the others were getting a reduced quantum or even NIL domestic gas.

It may be underlined that Petroleum & Natural Gas Regulatory Board (PNGRB) had, in 2009, envisaged rolling out CGD entities in about 300 Geographical Areas (GAs) in a phased manner. In the few GAs authorized by PNGRB, the growth in the CNG (transport) and PNG (domestic) has not been very promising since they were getting lower proportion of domestic gas. Even the markets of Delhi and Mumbai had attained stagnation in growth. Hence, there was an immediate need to make the CNG (transport) and PNG (domestic) more attractive by providing enhanced share of cheaper domestic gas. Thus raising the share of domestic gas for meeting 100% of the requirement for the CNG (transport) and PNG (domestic) segments and keeping all the CGD entities on a level playing field, will give a big boost to the development and growth of various city gas projects in India.

Benefits arising out of increased usage of  CNG/PNG

·           CNG is one of the cleanest and most environment friendly fuel as compared to other fuels used by automotive vehicles. The level of vehicular emissions is significantly lower in case of CNG when compared to liquid fuels like Diesel and Petrol.

·           As per CPCB report 2010, it has been observed that due to predominant use of CNG as a transport fuel, even in highly populated metros of Mumbai and Delhi the share of vehicular exhaust emissions is 6% and 7% respectively as compared to 21% in Kanpur and 41% in Bangalore (cities predominantly using liquid fuels for transport).

·           Every 1 MMSCMD domestic PNG caters to about 20 lakh households and can replace about 180 lakh subsidized cylinders

·           Domestic PNG not only provides convenience and is much safer. it also indirectly saves a lot of fuel and efforts that are required in managing logistics of domestic LPG cylinders.

·           Increased use of CNG and PNG, substituting liquid fuels, would also lead to significant reduction in the subsidy burden of the Government.

CNG has several distinctions over other fuels:

Environmental

·        No impurities, No Sulphur (S), No lead (Pb)

·        Very low levels of polluting gaseous emissions without smell and dust

·        Molecular structure compactness prevents the reactive processes which leads to the formation of Ozone (O₃) in the troposphere.

Safety

·        Lighter than air - in case of leak no dangerous puddles

·        Unlikely to ignite due to:

o       High ignition temperature

o       Narrow range of ignition

·        Lowest injury and death rate per vehicle mile

·        CNG cylinders structurally most sound and have passed severe tests

Economical

·        Cheaper than conventional fuel.

·        Payback period is short

Technical

·        Very high antiknock power (more than 120 ON) allows greater performance compared to petrol.

·        It has no evaporation leaks and spills of fuel, during re-fueling .

·        Its combustion produces  very low quantity of carbon deposits (permits a longer life of lubricant oil, spark plug, piston drum, valves & other components)

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RCJ/Release-CNG-PNG get domestic gas