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Unlocking Upcoming Multimillion Dollar Opportunity in City Gas Distribution (CGD) Sector in India - Analysing 86 Geographical Areas notified under PNGRB Round IX Bidding (2018)

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  • 520 Pages
  • May 2018
  • Region: India
  • Mergen Advisory
  • ID: 4564208

As on December 2017, Nearly 31 CGD Entities are Developing CGD Network in 81 Geographical Areas in 21 States/Union Territories

The City Gas Distribution projects in India are emerging as an important driver for overall natural gas value chain development. The new bidding parameters, diversity & vastness of the notified geographical areas and government’s push for a natural gas fuelled nation are indicating towards an enhanced enthusiasm in the upcoming bidding round.

However, a major challenge for both experienced bidders and new entrants alike is the development of a robust demand assessment model (baseline and forecasted demand), network layout, technical configuration/simulation and most importantly a bottom-up assessment of viable CNG station location. As experienced before, the biggest ask of bidders (and consultants supporting these bidders) is the limited timeframe for conducting the assessment and putting together a robust strategy for a winning bid.

We are sensitive to the needs and concerns of the gas industry, especially when it comes to an interesting bidding round such as this. This report offers CGD industry stakeholders a strategic insight on the potential & viability of the notified individual geographical areas.

Table of Contents

1. Executive Summary
2. Analysis of Existing CGD Projects in India
  • Evolution of CGD projects in India, based on:
  • CGD projects awarded on nomination basis: Basis of formation, Entity Structure, etc.
  • CGD projects awarded on competitive bidding basis: Basis of selection, Performance till date, etc.
  • Overview of entities & stakeholders engaged in CGD business in India and their positioning on the CGD business life cycle;
  • Gas consumption trend of existing CGD projects
  • Entity wise; and
  • Region wise
  • CGD infrastructure of existing CGD projects
  • Entity wise; and
  • Region wise
3. Executive Analysis of previous PNGRB Bidding Rounds
  • Scale and number of Geographical Areas in each of the previous bidding rounds
  • Profile of interested bidders and bidder strength (nos.)
  • Bidding Trend – How did the winning bid looked like?
  • Time scale – Gap between each stage from notification of GA to letter of authorization
4. Business Performance of Existing CGD Projects: Business Environment, Business Models, Growth Drivers and Strategies adopted by key CGD entities in:
  • IGL,
  • MGL,
  • GAIL Gas,
  • BGL,
  • Gujarat Gas
5. Critical Elements of a CGD Project – Infrastructure, Gas Sourcing, Market Base, Investments, Retailing & Marketing
  • Infrastructure
  • Sub-Transmission Pipeline;
  • City Gate Station;
  • Odorization System;
  • Carbon Steel Main Ring;
  • Field Regulating Station;
  • CNG Station & Compressors;
  • Piped Natural Gas;
  • Last Mile Connectivity; and
  • SCADA;
  • Natural Gas Sourcing
  • Factors influencing the Natural Gas Sourcing mix;
  • Issues & Challenges in Natural Gas Sourcing
  • Market Base
  • Consumer segmentation;
  • Consumer categorization based on potential demand criticality
  • Ranking based on affordability level/switch over potential of consumer segment;
  • Investments (Capital Cost of the project)
  • Listing of Capital Cost items;
  • Break-up of capital cost into material cost and implementation cost;
  • Capital outflow trend over the life of a CGD project;
  • Natural Gas Retailing & Marketing
  • Approach for competitive pricing of CNG and PNG;
  • Measures for market penetration and conversion;
  • Measures for early realization of returns and demand ramp-up
6. Expert level commentary on CGD regulations (Focus on Bidding)
  • Evolution of regulations and bidding parameters
  • Underlying reasons for frequent changes in regulations for bidding
  • Snap-shot of CGD Round IX Bidding Regulations
  • Highlighting key concerns of the stakeholders on the regulations for CGD Round IX bidding
7. Analysis of IX Round CGD Projects (All 86 Geographical Areas discussed individually)
  • Introduction of Geographical Area
  • Geographical Area profiling
  • Industrial Area Profile
  • Demand Clusters
  • Population Density
  • Major Roads & Highways
  • Natural Gas Connectivity
  • Status of nearest natural gas pipeline
  • Details of gas pipeline in proximity of the GA – Pipeline name, entity, capacity, diameter, utilization, etc.
  • Proximity of any existing CGD project
  • Proximity to nearest RLNG terminal
  • Details of RLNG terminal – Operating status, capacity, utilization, entity
  • Growth trend of alternate fuel consumption in the district (FO, LDO, HSD, LPG-Bulk, LPG-Packed, Naphtha, Auto LPG, etc.)
  • SWOT analysis
8. Demand Potential of Round IX Geographical Areas: Baseline and 20 Year Projection
  • Present baseline demand based on alternate fuel consumption and potential to convert
  • Analysis of historic growth trends
  • Projected consumer segment wise demand potential – 5, 10, 15, 20 and 25 year projection
  • Highlighting key demand driver for the geographical area
  • Geographical Area wise summary & ranking of natural gas demand potential
  • Infrastructure requirement for Round IX Geographical Areas
  • Assessment of peak demand of the overall CGD network
  • Assessment of peak demand for each consumer segment
  • Sub transmission pipeline requirement and length & diameter
  • Major infrastructure sizing: gas connections, CNG compressors, MDPE, CS Pipeline, pressure reducing skid, etc.
10. Capital and Operating expenses for Round IX Geographical Areas
11. Outlook on overall project feasibility (Go/No Go) for Round IX Geographical Areas – Considering parameters such as:
  • Technical parameters: Terrain, Urbanization, Execution bottlenecks
  • Financial parameters: Overall capital and operating expenses
  • Market parameters: Gas sourcing, Gas offtake potential and revenues
12. Unlocking investment potential for major CGD stakeholders from the upcoming round IX bidding:
  • Investment opportunities in CGD projects as a CGD entity enjoying marketing and infrastructure exclusivity
  • Opportunity for Gas Pipeline Manufacturers in terms of pipeline requirement
  • Opportunity for Equipment Manufacturers: Critical assets such as CNG Compressor, Pressure Reducing Skid and CNG cylinder
  • Opportunities for Project Management Companies for CGD network PMC work
  • Opportunities for IT Companies: Scada & Automation

Companies Mentioned

A selection of companies mentioned in this report includes:

  • IGL
  • MGL
  • GGL
  • CUGL
  • Indian Oil
  • Adani
  • GAIL
  • MoPNG
  • MNGL
  • IMC limited
  • BPCL
  • HPCL
  • Gujarat Gas
  • GSPC
  • Petronet LNG
  • Shell