Gas cos use mobile refuelling units to expand retail sale
City gas distribution (CGD) companies are looking to expand their retailing business through mobile refuelling units (MRUs), as oil marketing companies are not relenting on lowering commissions for letting distribution companies use their premises for selling compressed natural gas (CNG). Distribution companies are also increasing their own CNG presence.
Mumbai-based Mahanagar Gas Ltd (MGL) and Delhi’s Indraprastha Gas Ltd (IGL), among others, areindra piloting MRUs and have invited expressions of interest for setting up more units.
We have installed an MRU at Ajivali along the old Mumbai-Pune-Mumbai-Goa highway. The infrastructure has been put in place. The facility, however, is awaiting final regulatory clearance,” said a senior MGL official, adding that once the pilot is successful, it will try to bring the concept to Mumbai and adjoining municipalities. “There is a real need for opening more such stations because the vehicle population is very high here compared with the number of outlets.”
MRUs, used for refuelling, can be conveniently parked at parking lots or open parks and land parcels approved by local authorities.
These units are an effective way of reaching out to customers and will also accelerate the expansion plans of city gas distribution companies, considering that setting up a CNG outlet is capital intensive and could cost between ₹75 lakh and ₹1 crore.
Besides, availability of land is a concern.
Though compared with CNG stations the throughput of an MRU will be a little less, the number of customers served will definitely be higher, pushing CNG volumes. For CGD players, over 65% of their existing sales volumes comes through co-located CNG outlets on OMC land, and OMCs are, therefore, demanding higher commission.
City gas distribution companies, such as MGL, IGL, and Gujarat Gas, have urged the Union government to negotiate with the OMCs after they demanded 90-100% increase in commissions from the existing ₹4.5 per kg to ₹7-8 per kg.
OMCs, however, reasoned that by using their retail outlets, the city gas companies not only get access to ready-made infrastructure, but also customers, hence, they are within their rights to seek a higher cost from the distribution companies.
Queries emailed to the spokespersons of OMCs and city gas distributors on Monday did not elicit a response till press time.