On May 13, 2009 the petroleum ministry informed RIL to perform gas sales agreements with these companies.
The development is vastly vital for a number of reasons. Natural gas used in a compressed form or supplied to homes through pipes is a far cheaper alternative than liquefied petroleum gas (LPG), diesel or petrol. It will cost a housewife INR325 to INR350 to purchase an LPG cylinder whereas piped natural gas (PNG) is around 25% to 30% cheaper. Poor gas accessibility has till now restricted the usage of PNG and CNG usage to a few million homes and to a few retail outlets in Mumbai and Delhi.
The government’s decision is projected to change all that. Distribution companies such as Mahanagar Gas Limited in Mumbai and Indraprastha Gas Limited in Delhi will be able to add more consumers and produce more revenue once the gas becomes available. Commuters such as those who use buses or taxis and auto rickshaws using CNG will gain as transport costs drop. In Mumbai alone, over 10-lakh consumers are projected to switch over to PNG.
As per estimates, nearly five lakh vehicles use CNG in India. This number is also projected to increase. “PNG will help the consumer to save on fuel bills. The government will also be able to save on subsidy,” said an analyst with an international research firm.
An RIL official confirmed the receipt of the letter. “We have received the government approval for supply of 834,631 standard cubic meters per day of gas to six city gas distribution entities with operations in dozen cities,” he added. These entities include Mahanagar Gas, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and Hindustan Petroleum Corporation.
RIL is already selling natural gas to fertilizer and power companies and the addition of city gas distribution companies will help raise its revenue and profitability.
With RIL’s gas flowing, Mahanagar Gas Limited is in expansion mode to move the gas from south Mumbai to suburbs such as Bhayander, Mira Road, Navi Mumbai and Thane. The company is spending over INR22 billion to lay the infrastructure and add new connections.
