IGL: India’s gas consumption could peak in 2037-2040: Sanjay Kumar, IGL

“Once we operate these steel lines, we will see strong growth in new areas like Kanpur, Muzaffarnagar, then Rajasthan, Ajmer and Haryana. I expect one million cubic meters of growth from these regions next fiscal year, which is the end of March 24, that’s the estimate we have at the end,” said Sanjay KumarMD, IGL.

You did a total volume of about 8.1 MMSCMD in the third quarter. How is the trading volume in the first two months of the fourth quarter?
We have slightly increased volume above 8.1, which is the average we reported last quarter. Currently, we are reaching about 8.25 to 8.3 million cubic meters per day. So the volume has increased. The reason is valuation has actually cooled down a bit. While we use more than 8 million cubic meters of gas, about 75% of it gas comes from APM, the package is not APM and the rest is sourced from the market whether it is our long term contract or a contract from the spot market or gas exchange. Currently, the price has dropped recently and the current price we are looking at in these markets is around $14 so it is a big relief for CGD companies like us who have ever bid in excess of $30 just six months ago. Also would like to understand if you can point us to the kind of growth you are writing from older as well as newer regions, if you can categorize.
Much of the current volume we are marketing is actually in the areas around Delhi. So the new GAs we have in Uttar Pradesh, Rajasthan and Haryana, we will operate the main pipelines there for the next three months. By June, we will put into operation large steel pipelines that will supply actual gas to these geographies and CNG stations will have an online gas supply.

Currently, CNG stations in these areas are serviced by LCVs, which are commercial vehicles with floors, so this is not an optimal supply model for CNG stations. So once we put these steel lines into operation we will see a lot of development in new areas like Kanpur, Muzaffarnagar, then in Rajasthan, Ajmer and Haryana. So we intend that we will have one million cubic meters of growth from these regions in the next financial year, which is by the end of March 24, that is the estimate we have at the end.

The CNG to diesel price differential has almost halved. Is there a slowdown in car conversions due to the same and what is the current conversion rate?
Depends on the operator of the geographical area. So for IGL, we didn’t raise prices to that extent. We have maintained our prices at approximately Rs 79 in Delhi for the last 4-5 months. Now, if the price is just right, the conversion rate will continue. Our conversion rate in January really went up. From 14,000, we increased the vehicle conversion rate to 16,000 in January for our geographies.

And in your opinion, what part of your CNG volume is sold to buses and how much to tricycles and which vehicles are most likely to be converted to electric vehicles by regulatory intervention?
20% of our sales are for buses and other cars etc. Currently, a portion of those sales may be affected by EV buses. Buses are a big customer of CNG and to manage the risk we are facing, we are also planning to enter the electric vehicle sector and secondly if we keep the prices moderate, It will be a bit difficult for manufacturers to decide to switch to electric vehicles because the cost factor is always present in electric vehicles. But that risk is really related to Delhi, where the transition to EVs is likely. In other areas where we are active, it can actually take more than 5 years to convert buses into trams, that’s our call.

What will IGL’s core business be in 5 years? Will it be a gas company that is also using their outlets to provide other additional services like EV charging or will you remain a gas distribution company?
We’ll also be in the electric vehicle business, but experts around the world are talking about the energy impossible trinity, energy affordability, energy sustainability and energy security. quantity. Now if energy security is not there, it will be a problem. Affordability is also important. Now, if you look at how things are going, most advanced countries will reduce their gas and oil consumption in the next 10-15 years, maybe 50%. But in countries like India, their impact won’t be much. In fact, India’s gas consumption will probably peak between 2037 and 2040. So we will continue to grow from here to 2040 and if domestic gas consumption continues. growing, IGL will continue to take a larger share of their business from the gas business and EV will be the second business that I see 5 years from now.

Can you incubate an electric vehicle business because that involves setting up the infrastructure, it involves setting up the charging stations, the infrastructure has to be invested first and the annuity starts later. Can you do that on an existing balance sheet, with existing cash flows?
We are a debt-free company and we see no problem in that. Furthermore, the electric vehicle business has come up with its own model, people actually provide that annuity, they set up a fee basis and they try to get a share, some share, or some portion. hundred of revenue comes from the fee business. That pattern is also very popular, we’ve come across that. As for IGL, we are currently a debt-free company, we do not foresee any such problems.


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