North East Shines Despite Tough Environment
June 20, 2018
OAJ: Could you please throw light on the current status as well as the share of the natural gas in the country’s primary energy mix?
Even though the consumption of gas increased in the first seven months of 2017-18, there has been no quantum jump. The current share of natural gas in India’s energy mix is 6.5% which is projected to grow 15% by 2030. Even if we look at Gas demand projections, it is estimated that gas share will not go beyond 7.8% in India’s primary energy mix. In India, the gas sector continues to expand in a phenomenal manner. The current cross-country pipeline of 16,000 Km is augmented with an additional 15,000 Km. The commencement of Ganga Urja project initiated by Government Of India is indeed a positive step in the direction and will bring gas to the eastern region of the country.
On LNG front, additional import capacities are planned which would further ensure supply security, but developing the market including city gas distribution segment is the key to increase gas consumption. The current gas statistics shows that India’s Current Gas production stands at 32 BCM and LNG imports are 24.69 BCM while the overall gas consumptions stands at 50.1 BCM, which are being catered to chief sectors such as the Power, CGD, and Industrial & Fertilizer consumptions.
OAJ: May we request you to address the challenges in the region and how are overcoming the challenges to score better in the country?
Gangopadhyay :Predominantly, North East India is isolated from the mainland India and geographically challenged due to its complex topography, thereby limiting movement of men and equipment effectively. Secondly, scarcity of skilled manpower in the region is a big factor for specialised works. There is no other way but to utilize available and limited human resources. The geopolitical equation of the region is still recovering from the continued insurgency, the effect of which is still present in the region for which the industry has not grown to the anticipated level. However, the emphasis is now being given to region as per government’s ‘Act East’ policy. Apart from the above, the industrial growth in the region has remained negligible thereby limiting the scope of enhancement of the business. Not many vendors are interested to work in the region due to high input cost and lower bottom-line.
TNGCL, which started working since 1990 has been able to gradually enhance its domain expertise over the years and has been successful in effectively deploying necessary resources in spite of great limitations. We have learned to be productive in spite of limitation in a hard way, which is why the company has always remained profitable. With the introduction of GAIL (India) Ltd as the main promoter, there has been a tremendous collaboration of expertise from both the entities thus helping TNGCL to grow faster CGD entity in the entire eastern region.
TNGCL is the only CGD Company in entire East and North-East India to have CNG operation in place and this has been possible due to active support from promoters, effective management & inclusion of best business practices in the area of O&M and safety. While the CAPEX has been really high over the years due to disadvantageous geographical locations and other constraints, TNGCL been successful in keeping the OPEX at the lower side. Through aggressive marketing and promotional activities, social inclusion and value proposition, we have been able to popularize Gas Based economy in the authorized geographical area of Agartala.
In 2016 Tripura associated with Broad Gauge Rail connectivity of mainland and thus the state has high hopes for the project which will reduce the input cost. Concurrently, the state also witnessed the ceremony of laying the foundation stone for the construction of Agartala-Akhaura (Bangladesh) rail track which has bought high hopes for the citizens in the eastern region. The cost of the project for 15 km rail track is approximate ` 967.85 crore wherein the 5 km rail track of 15 km falls in Tripura region and 10 km in Bangladesh. The construction of the infrastructure (India & Bangladesh) will be separately endured by Ministry of Development of North Eastern Region (Indian side) while the Ministry Of External Affairs is financing it for the Bangladesh side.
The project on completion will prove highly beneficial for not only Agartala-Kolkata railway linking but it is hoped the project would also help Tripura become a gateway of Trans-Asian railway network thereby bringing in much needed investments, cheaper manpower, low cost transportation and improvising economies of the eastern region.
OAJ: Since India’s, natural gas demand has been affected due to lower availability; how is Tripura Natural Gas Company Limited is overcoming with the demand issues in the country?
Gangopadhyay :TNGCL has an overall allocation of 0.13 MMSCMD of gas and currently has been using around 0.10MMSCMD of Gas. TNGCL uses domestic gas sourced from local production from ONGCL, as Tripura is not connected to national Gas Grid. We have been constantly successful in meeting the demand supply gap due to the relatively small geographical area.
Nonetheless, as we are nearing the saturation point in our authorized geographical areas and as there has been a surge in demand for PNG & CNG. TNGCL has approached ONGCL to provide dry and condensate free gas from neighbouring Indiranagar GCS to reduce the CAPEX. We have received assurance from ONGCL to overcome the shortage of the gas. Our organisation will play a vital role post the cross-country pipeline under North Eastern Hydrocarbon Vision 2030 reaches Tripura.
OAJ: Could you please describe the current production of Tripura Natural Gas Company Limited?
Gangopadhyay: We have not worked on the Exploration and production activities which have always been operated by ONGCL – Tripura asset. TNGCL has an overall allocation of 0.13 MMSCMD of gas wherein currently, we are using around 0.10 MMSCMD of gas towards domestic, industrial, commercial & CNG usage in and around of Agartala city. Apart from this TNGCL has an allocation of 16000 SCMD of gas at Market Driven Price for Industrial Growth Centre at Bodhjungnagar, Agartala.
OAJ: India's natural gas output projected to rise 60 % in 4 years, what is your opinion and is the current policy framework supportive towards the Natural Gas industry?
Gangopadhyay : The government’s aim to increase the share of natural gas in the energy basket from 6% to 15% by 2030 has helped in initiating numerous policies to promote the increasing availability of natural gas in the market. The various measures such as HELP, Open Acreage License Policy, etc. were initiated by the government for developing the upstream gas sector, viability gap funding for gas pipeline infrastructure and liberal grant of permit to LNG import facilities. The consumption of natural gas increased during the previous year, i.e. 2016 due to the large usage by the city gas and the industrial sector.
The policy framework has been supportive of the government’s aim to increase the gas share in the energy basket.
The framework has extended its support for various aspects and segments such as producing additional MMSCMD of natural gas by ONGCL & Reliance, public utility status to CGD companies, expanding the number of cities - smart cities, announcing the 9th round of PNGRB bidding scattered over districts rather than cities & clusters, reviewing the bidding criteria, improvising the pipeline infrastructure, expanding the capacity of LNG terminals to 50 MT, penetration of gas in smart cities, creating positive outlook for trading hubs introducing ban on pet coke &FO , substantiating liquid fuels by gas and convincing the usage of LNG for transportation has boosted the gas economy.
However, the policy framework needs to answer various uncertainties which include: On the regulatory front, will there be a review of PNGRB Act-Regulations and standards for mobile filling stations? Will domestic pricing formula be revised? What would be the price of LNG and in the future, how it will move in the international market? Do the third parties will have access for utilisation of LNG import facilities? How will the demand emerge at higher prices? Will there be widespread access to the gas –infrastructure development? What would be the Impact on the Natural gas vehicle (NGV) due to e-mobility push? Even though there is a heavy emphasis to create a gas based economy and to meet the demand & supply scenario, the current policy framework needs periodical assessment of the situation from the ground reality perspective. The consumption of Regasification of liquefied natural gas could go low then the demand potential due to competition from liquid fuels and coal resulting in significant competitive pressures among LNG terminals. Nevertheless, the government possess ambitious plans to increase the pipeline capacity; the constrained gas availability can create a hurdle for the new pipeline projects which requires large investments. The policy drafters should revise on the premium paid on natural gas for all new discoveries in ultra-deep-water and deepwater areas as well as in high pressure-high-temperature areas. In the current scenario, the gas prices are altered as per the market dynamics in every six months which has recently seen an upward trend thereby putting a lot of pressure on the end users. The Indian gas market also has an opportunity to transform and grow significantly. This growth will be driven by several critical economic and social drivers emerging from India’s national development agenda. While there are many estimates for India’s long-term gas demand, given different assumptions around the availability, affordability and growth in key end-use segments, it is clear that India’s gas demand could at least double from the current consumption levels over the next 10-15 years. The actual build-up of gas demand would be a function of the interplay of various factors and policy initiatives such as the development of clean energy sectors, pricing and cost competitiveness of gas, climate change commitments, investments in gas sourcing and supply infrastructure, and finally the development of end-use sectors.
OAJ: The demand for gas has been highly price sensitive, and the actual demand has varied widely from the projection in the past, what would be your strategies to sail swiftly in the ocean?
Gangopadhyay : The supplies to India’s gas market can be categorised into two segments: domestically produced and imported (via LNG) gas. The price of domestic gas is lower than that of LNG and is defined by the Government’s adopted indexation formula. The Government has liberalized domestic gas pricing in a phased manner wherein, from a pure administered pricing mechanism, the pricing moved to the part indexation and thereafter to full indexation that was introduced in 2014. The government had also indicated the development of a different pricing formula for gas production from deep offshore as well as high pressure/high temperature areas, which is yet to be announced. The price of imported LNG is higher than that of domestic gas as the government does not exercise any control on LNG imports and the marketing of RLNG.
As TNGCL only works in the CGD Sector and since Tripura is not connected to the National Gas Grid and also operates on the basis of the gas received from Domestic production, the best strategy is to follow the Govt. directives. According to the government guidelines, they are providing the north eastern region with 40% reduced base rate to enhance and promote usage of Natural Gas in NE region, thereby providing good cushion for sustainable development.
The regional cooperation between India and Bangladesh plays a vital role in meeting the current high demand and supply ends and in the future it will also encourage the gas based economy in the region. Tripura is strategically located in the North Eastern Region with 856 KM long border sharing with its neighbouring Bangladesh and the southernmost town Sabroom of Tripura is advantageously located near Chittagong Port of Bangladesh, wherein Bangladesh first LNG terminal is supposed established by 2019. The Excelerate Energy has signed agreements with Petrobangla for the implementation Moheshkhali (Bangladesh) Floating LNG terminal. The transit between North East India and rest of the country and overseas via Bangladesh is likely to become a reality because of this Floating LNG terminal at Moheshkhali (Bangladesh) with Sabroom of South Tripura District becoming the entry point to India.
OAJ: What are the steps taken by the government in order to enhance the north eastern frontier‘s natural gas sector?
Gangopadhyay : : In order to enhance the North East’s Natural Gas sector, Govt. Of India will be implementing North East Hydrocarbon Vision 2030 which proposes investments of ` 130,000 crores in 15 years to ramp up hydrocarbon production in Northeast India. The Hydrocarbon Vision 2030 outlines steps to leverage the hydrocarbon sector for social and economic development of the north-east region. The states covered under it are Assam, Arunachal Pradesh, Meghalaya, Manipur, Nagaland, Sikkim, Mizoram and Tripura.
The Key features of the Hydrocarbon Vision 2030 are to leverage the north-east region’s hydrocarbon potential, improve the availability of petroleum products, enhance the access to clean fuels, facilitate the economic development and link common people to the economic activities in this sector. It lays out a detailed roadmap for the entire hydrocarbons value chain, covering all aspects of upstream, midstream and downstream segments of this sector.
The Vision rests on five pillars of 5Ps People, Policy, Partnership, Projects and Production. The vision also focuses on other areas including exploring hydrocarbon linkages and trade opportunities with neighbouring countries like Bangladesh, Myanmar, Nepal and Bhutan. It also aims at doubling Gas production by 2030, fast tracking projects, generating employment opportunities and promoting cooperation with neighbouring countries.
OAJ: Could you please share the future plans of Tripura Natural Gas Company Limited?
Gangopadhyay : : TNGCL currently supplies PNG to over 35000 Domestic, 450 plus Commercial, 50 plus Industrial consumers in and around the city of Agartala, the state capital of Tripura and dispenses CNG to over 12000 vehicles every day through 6 of its CNG Stations. The future plan now revolves around the upcoming 9th round of PNGRB Bidding, wherein PNGRB has opened West Tripura and Gomati Tripura District for bidding.
As discussed earlier about the Chittagong Port, further the Bangladesh Govt. has also agreed on India to use the Chittagong Port which is approximately 70 KM from Tripura’s Southern Border town of Sabroom and is estimated that it will be established by 2019.
TNGCL has a vision to lay around 120 KM long pipeline to existing PNG network which will help in creating a gas based economy and also help in creating 190 Km long Agartala-Teliamura- Ambassa-Kumarghat-Dharmanagar CNG Green Corridor along the National Highway thereby connecting complete Tripura with CNG Infrastructure.
TNGCL is enhancing its CNG network by creating Green Corridors between major towns of Tripura. It is noteworthy to mention here that TNGCL has signed a MoU with IOCL on 4th July 2017 to open up CNG Stations in their retails outlets in Tripura wherever technically feasible. TNGCL & IOCL has jointly identified 12 retail outlets to be upgraded to a CNG station out of which 4 stations will come up during FY 2018-19, as per target entrusted by Govt. Of India, TNGCL is aiming at providing around 10000 fresh PNG domestic connections in FY 2018-19 in the PNGRB authorised geographical area of Agartala city alone.
While propagating the CGD Infrastructure, TNGCL will strictly follow safety first approach during the implementation and day to day operations. TNGCL with support and guidance of its major promoter GAIL (India) Ltd. will adopt latest systems and procedures while expanding the gas based economy in this North Eastern part of India.