Cooking gas distributors of public sector oil companies, a trade instrumental in making clean, efficient fuel reach millions of households over the decades, may get to play a role in the upcoming city gas distribution (CGD) projects too.
Albeit limited and in partnership with other entities, such a prospect looks imminent with Indian Oil Corporation (IOC) permitting them to participate in its tender for last-mile connectivity work as well as direct marketing work for piped natural gas connections to households.
Marketing connections
Besides piped natural gas (PNG) supplies, the provision of compressed natural gas (CNG) to fuel outlets for automobiles to fill and to industrial units are the other components under the CGD. Nonetheless, the last-mile connectivity work of taking the pipeline from a trunk line to the households as well as marketing the connections could open a new window of opportunity for the existing distributors meeting the eligibility norms.
Though the tender permits them as a partner – with the lead contractor to undertake work related to GI/Cu installations for PNG connection –, many LPG distributors have experience in setting up and servicing reticulated (piped LPG) connections in cities, including Hyderabad.
The CGD projects has been awarded as GAs (Geographical Area) by Petroleum and Natural Gas Regulatory Board (PNGRB) that range from one city being a GA to a number of districts clubbed as a GA.
To that extent, the number of distributors who stood to benefit could be small given that there are around 24,000 LPG distributors.
The IOC had won 17 exclusive GAs in the 9th and 10th CGD rounds of PNGRB. In addition, with its JV partners it has also won 23 GAs.
The set of tenders floated by IOC, for the last mile connectivity and direct marketing agency work for PNG, pertains to the two GAs of Rewa and Guna in Madhya Pradesh; the GA made up Jagtial, Peddapalle, Karimnagar and Rajanna Sircilla in Telangana; and Salem in Tamil Nadu.
According to IOC officials familiar with CGD projects, as part of the work from the mainline, MDPE lines would be drawn to the households.
The plan is to create a panel of distributors in each of the GAs and direct customers desirous of getting a piped gas connection to approach them.
A new channel of business is how it should emerge for LPG distributors, who according to oil industry officials, in the next few years are likely to feel the heat of the competition from CGD projects. Natural gas is safer, cost-effective and piped supplies offer more convenience.
They, however, do not rule out the possibility of other firms who have been awarded CGD projects, like IOC, roping in LPG distributors. In doing so, they would like to draw on the reach and familiarity of the area of the existing distributors in marketing the connections.
