India City Gas Distribution (Cgd) Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

India City Gas Distribution (Cgd) Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The India city gas distribution (CGD) market is estimated to register a CAGR of over 15% during the forecast period. The outbreak of the COVID-19 pandemic in Q1 of 2020 negatively impacted the market. Lockdown restrictions imposed by the Government of India to stop the spread of COVID-19 infections in the country caused a drop in demand, which affected the market. For instance, the investment firm ICRA Ltd estimated that the city gas distribution sector's domestic gas volumes declined by 12% month-on-month to 15.2 million metric standard cubic meters per day (MMSCMD) in April 2020, as the passenger and transportation end-user segments suffered the most during lockdowns.

Factors such as growing government initiatives to increase natural gas usage as a cleaner fuel than liquefied natural gas (LPG) and conventional fuels like wood, cow dung, etc., are likely to drive the market during the forecast period. However, the long waiting period for various ministries' approvals to lay pipelines and lack of awareness of the benefits of natural gas among people, especially in rural India, are expected to hinder the market growth.

PNG connections are one of the prominent segments expected to dominate India's CGD market during the forecast period. PNG connections include domestic, commercial, and industrial PNG connections.

The government's intention of converting India into a gas-based economy is expected to increase the natural gas share in its energy mix from 6% in 2019 to 15% by 2030. The government also has plans to expand and cover untapped areas for natural gas access, which would create an opportunity for the market to grow in the near future.

Increasing PNG connections and CNG stations are expected to drive the market. It is estimated that upon the completion of work for the 11th bidding round, nearly 96% of India's population would have access to natural gas uses.

Natural gas supply to domestic, commercial, and industrial sectors through galvanized iron pipelines, along with necessary fittings, pressure regulators, and a meter, is termed as a PNG connection. Natural gas supplies primarily consist of methane gas and are considered one of the cleanest forms of energy. Domestic and few commercial connections use it as cooking gas, while industrial connections use it for heating purposes.

In January 2020, there were 59 lakh domestic PNG connections, 29 thousand commercial connections, and 10 thousand industrial connections. Gujarat has the highest number of connections, with nearly 22 lakh domestic connections, 19 thousand commercial, and 5 thousand industrial connections.

With the increasing government initiatives to increase the use of natural gas as cooking gas to reduce the percentage of dead people from the combustion of fossil fuels like wood, coal, or cow dung, PNG connections are expected to increase over the years. For instance, in the last two years, PNGRB has given authorization to 22 private operators for providing PNG with more houses. They are in the process of establishing the gas infrastructure as per the "Minimum Work Programme."

Completion of the 11th bidding round is expected to add a large number of PNG domestic connections. It is expected to add nearly three crores of PNG domestic connections by 2029, making the total connections to nearly 3.5 crores.

Thus, with the above-mentioned points, the PNG connections segment is likely to dominate the market during the forecast period.

The India CGD market primarily includes PNG connections and CNG stations. PNG connections are provided for residential, commercial, and industrial purposes, while CNG stations are installed to access natural gas for transportation purposes.

11 CGD bidding rounds were completed till 2021, including natural gas access to 215 districts in 19 states and one union territory. As per data provided by PNGRB, as of December 2020, the total number of domestic PNG connections in India was approximately 72.47 lakh. It is expected to grow during the forecast period. Also, as of January 2021, India had 2,713 CNG stations.

The Petroleum & Natural Gas Regulatory Board in India, under the Natural Gas Infrastructure in India "Vision 2030," has announced plans to increase the share of natural gas in the energy mix by 20% in 2025 as compared to 11% in 2010, which may increase the number of PNG connections and CNG stations in the country.

The completion of the 11th CGD bidding round includes 215 districts (212 complete and 3 part) in 19 states and one union territory, which comprises nearly 71% of India's total population.

The 11th CGD round awarded major contracts to Bharat Petroleum Corporation Limited (BPCL), Megha Enterprises (MEIL), Indian Oil Corporation (IOC), and Adani Total. Additions to the connection in the future are expected to drive the CGD market throughout the forecast period.

The India city gas distribution (CGD) market is moderately fragmented. The key players in the market include Indraprastha Gas Limited, Mahanagar Gas Ltd, GAIL Gas Limited, Gujarat Gas Ltd, IndianOil-Adani Gas Pvt. Ltd, Haryana City Gas Distribution Network Ltd, Aavantika Gas Ltd, Sabarmati Gas Ltd, and Assam Gas Co. Ltd, among others.

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