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

Report
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.

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 (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

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

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Table of Contents

Companies Mentioned (Partial List)

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