CITY GAS DISTRIBUTION – CNG/LNG &AUTO LPG
- Indraprastha Gas: Piping up
- CNG scarcity hits livelihood of auto drivers in Andhra Pradesh
- Alternate fuels to hit petrol and diesel demand
Indraprastha Gas: Piping up
For the third quarter in a row, Delhi-based city gas distributor Indraprastha Gas (IGL) put up a stellar show. The company’s profit in the recent December 2016 quarter grew about 37% year-on-year, after 42% in the September quarter and 44% in the June quarter. This was on the back of healthy volumes and benign costs. The stock has been on a roll, nearly doubling over the past year. At ₹1,021, it now trades at about 26 times the trailing 12-month earnings, compared with the average of about 17 times over the last three years. While its valuation seems pricey relative to the past, the stock seems to have been re-rated. This is thanks to the company’s robust fundamentals and strong growth drivers that should sustain healthy performance. Costs have fallen sharply with the government prioritising supply of domestic gas to companies supplying CNG to vehicles and PNG to households. These segments account for more than 80% of business for IGL. Volume growth should remain strong, given the significant price differential between CNG and competing fuels such as petrol and diesel, and between PNG and domestic LPG. The Delhi government’s plans to add to the city’s bus fleet should also boost volumes. IGL has adequate spare capacity and is also investing in infrastructure to meet future demand growth.The company’s operating margin has improved to about 24% in the nine months ended December 2016 from about 19% in the year-ago period. Margins should sustain around these levels. A recent favourable directive by the North Delhi Municipal Corporation, sharply reducing its usage charge for granting right of way facility removes an overhang of high cost uncertainty for IGL among other service providers in Delhi.IGL also seems better-positioned to cater more to industrial and commercial customers, who are supplied imported gas. With the Budget cutting customs duty on LNG from 5 to 2.5%, imported gas should get cheaper and more price-competitive. Also, the recent moves by the Courts to clamp down on use of polluting fuels such as furnace oil and pet-coke in Delhi should mean increased opportunities for IGL. The company also plans to offer gas generators as an alternative to diesel generators for power back-up systems. Besides its Delhi stronghold, IGL also has 50% stake in Central UP Gas and Pune-based Maharashtra Natural Gas; these companies are profitable and doing well. The authorization to develop the city gas distribution network in Rewari district in Haryana will also aid growth. The government’s plans to have city gas distribution networks across the country should present many opportunities for experienced players such as IGL.
Source: Business Line/Indian Oil & Gas
CNG scarcity hits livelihood of auto drivers in Andhra Pradesh
Thousands of CNG auto drivers in the city are facing hardships due to shortage of adequate CNG to ply their auto-rickshaws. Existing four gas filling stations in the city are insufficient to meet the requirement of the auto drivers, who had been waiting two to four hours every day to fill their cylinders with the CNG.These CNG filling stations are located near Jakkampudi Colony, Ramavarappadu, Bhavanipuram and Ajith Singh Nagar. Another station is located at Tadepalli in Guntur district.Of the five CNG filling stations, two have gas pipeline and remaining three are operated manually. Due to insufficient availability of CNG, the auto drivers could not ply their vehicles as per the demand and restricting their services to limited hours. Consequently, these auto-rickshaw drivers are losing income daily.All the CNG stations are busy with filling gas every day. Due to heavy rush the auto drivers have to wait two to four hours for their turn. The transport department officials say that 13,000 CNG auto-rickshas are in and around the city.The existing CNG filling stations are not sufficient to cater to the needs of 13,000 CNG autos, said auto drivers. In addition to these vehicles, more than 4,000 CNG cars are plying in the city.Bhagyanagar Gas Limited (BGL), a joint venture of GAIL and HPCL, was incorporated as a city gas distribution company for distribution and marketing of CNG and piped natural gas (PNG) to domestic, commercial and industrial sectors in the state.The first commercial launch of CNG kicked off in August, 2005 in Vijayawada. Since then, the number of CNG vehicles is on the rise gradually in the city.