Informist, Thursday, Jun 27, 2024

--Gujarat Gas source: Plan capex of 12 bln rupees in FY25

--Gujarat Gas source: To use capex mainly for laying steel pipelines

--Gujarat Gas source: To sell piped gas to 330,000 new homes in FY25

--Gujarat Gas source: To give OK for 200 new CNG pumps by pvt players

By Sunil Raghu

AHMEDABAD – Gujarat Gas Ltd plans capital expenditure of nearly 12 bln rupees in 2024-25 (Apr-Mar), as against 8.12 bln rupees it had spent in 2023-24, a top company official told Informist on condition of anonymity. "We have 36,000 km of piped network currently and the majority of the proposed investment would be in laying steel pipelines across the states of Rajasthan, Punjab, Haryana, Madhya Pradesh and Maharashtra," the official said.

"We also plan to add 330,000 new residential connections in 2024-25." Currently, Gujarat Gas is connected to 2.1 mln households across 27 geographical areas in six states and one Union territory. In 2023-24, the company added 187,000 new households to its network of piped natural gas supply. It also sold 0.71 mscmd of natural gas to households in 2023-24.

Other than expanding its pipeline network, Gujarat Gas also hopes to add 200 compressed natural gas stations to its existing 808 pumps operating across India.

The government of Gujarat, which has a controlling stake in the company, had announced in November that going forward, Gujarat Gas would set up compressed natural gas stations primarily on a public-private partnership basis. As per the new scheme, dealers would be granted licences to set up stations and sell compressed natural gas. The dealer would be fully responsible for getting the requisite permissions and investment, including the land and equipment costs, to set up the station. Further, if a dealer decides to exit within 10 years of setting up a compressed natural gas station, they have to pay a penalty to Gujarat Gas.

As per the scheme, Gujarat Gas would only deliver gas to the dealer stations through its network of steel pipelines. Dealers would be required to spend a total of 5-6 bln rupees to set up these 200 stations. "With dealers spending every penny, this would not just be a big savings for Gujarat Gas, but it also opens up untapped potential for CNG sale across geographies as the dealer would have done his or her due diligence," the official said. "We received 628 applications and would grant approval to 200 of them. Of these, 75% would be in Gujarat, with the remaining in Maharashtra, Haryana and Punjab," the official said.

The stations of the company currently sell 500-3,000 kg of compressed natural gas per day, with break even at around 1,000 kg per day. "The CNG business is a cash and carry business. The customer pays you immediately. As for piped natural gas, the payment may come 45-90 days after the consumption of natural gas by commercial, residential or industrial user," the official said. "Moreover, you also need to keep an inventory in the form of natural gas in the pipeline. For Gujarat Gas it comes to nearly 4 bln rupees."

The company had attained an average compressed natural gas volume of 2.89 mscmd in 2023-24, 14% higher on year. Its volumes have just crossed 3 mscmd, the official said. Historically, the company's compressed natural gas sales have grown 11.5% annually. In the last financial year, Gujarat Gas had effectively not added a single compressed natural gas station to its network, compared to 102 it added in 2022-23.

At 1334 IST, shares of Gujarat Gas were down 0.9% at 615.55 rupees on the National Stock Exchange. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Aditya Sakorkar

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