AG&P Pratham, which has the rights to supply natural gas to domestic, automotive and industrial consumers of some parts of Chennai, Kancheepuram and Chengalpattu, will move the gas from Indian Oil Corporation’s LNG importation-cum-regassification terminal at Ennore, to its ‘mother station’ at Sriperumbudur, by trucks.

AG&P is the city gas distribution arm of the Singapore-based AG&P group. It has won rights to supply natural gas to 12 ‘geographical areas’ across 35 districts in India, through theDecember 9, 2018 and February 10, 2019 ‘city gas distribution’ bidding rounds organised by the Petroleum and Natural Gas Regulatory Board.

The company, which has said it would invest ₹10,000 crore in India over the next four years, has begun operations first in Jodhpur, Rajasthan, and Ramanathapuram, Tamil Nadu, by setting up compressed natural gas stations for supply to automobiles. Last week, the Tamil Nadu Chief Minister, M K Stalin, laid the foundation for the mother station at Sriperumbudur.

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The availability of natural gas, a cleaner and cheaper fuel, would be a boon to the Sriperumbudur-Oragadam region, home to many factories such as Hyundai, Saint Gobain, Renault-Nissan, Apollo Tyres and Royal Enfield. These industries currently use fuels such as LPG, furnace oil and diesel in their factories.

However, IOC’s pipeline connecting its Ennore terminal to Sriperumbudur is not yet complete. It is expected to be in place by March 2022.

“We are not going to wait for that,” Abhilesh Gupta, Managing Director, AG&P Pratham, told BusinessLine today. Till IOC’s pipeline is ready, the company would move the gas, in liquefied form in the company-owned cryogenic trucks from Ennore to Sriperumbudur. Incidentally, the company is doing the same in Jodhpur – bringing the gas in trucks from either Dahej or Hazira.

“The work of laying the pipelines from the mother station at Sriperumbudur to the industries would start within the next 15-20 days,” Gupta said. “In the next 90 days, the company would open 20 more CNG stations in Tamil Nadu,” he added.

Natural gas & GST

A ‘city gas distribution entity’ has to procure the gas it would supply to industrial consumers at market prices. But for domestic (cooking gas) and automotive, the CDG entity gets gas at the rates fixed by the government (Petroleum Planning and Analysis Cell), which is reset every six months.

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The current prices, for April-September, is $1.79 a MMBTU. The prices the customer (of cooking or automobile gas) pays is substantially lower than the competing fuels, such as LPG or petrol.

Gupta pointed out that natural gas, which is outside the GST regime, needs to compete with other fuels that are under GST (and hence cheaper). The industry has been demanding for long that natural gas should be under GST – something the Prime Minister himself has promised. “If the fuel comes under GST, it would be even cheaper to the consumer,” Gupta said.

‘Right of Use’ (RoU) charges levied by the municipal bodies on per-meter length of the pipeline laid is another burden. Gupta said that a CDG entity could take RoU charges of up to ₹350 a meter, but often the charges are much above that level.

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