Covid 19 impact: CGD firms concerned over Force Majeure, demand destruction and labour shortage
Indian City Gas Distribution (CGD) companies are scrambling to deal with Force majeure notices, demand destruction, labour shortage and liquidity squeeze as a result of Covid-19, executives from three Indian CGD companies said.
They said the time-line of pipeline and city gas distribution projects being implemented will be hit due to ongoing challenges faced by the industry. The executives from Indraprashta Gas Limited (IGL), GAIL (India) and Adani Gas were talking at a webcast on Gas Market Outlook- Navigating the Challenges organized by industry body Federation of Indian Petroleum Industry (FIPI) and consultancy firm EY.
“Some of the challenges we see are invocation of force majeure, renegotiations to bring down the prices of old contracts. Project execution is at a standstill now during the lockdown. There is expected to be delay in restarting operations even after the lockdown is lifted owing to lack of adequate workers and equipment,” IGL MD E S Ranganathan said.
He added a shortfall in achieving the minimum work programme is certain and all the CGD companies will witness an increase in working capital requirement as there are delays in realisation of receivables. Demand for Compressed Natural Gas (CNG) from the transport sector and the industrial and commercial sectors has been severely hit.
Ranganathan said the average sale of CNG is down 85 per cent and only 50 per cent of IGL’s retail outlets are open with reduced workforce.