16
New Delhi: The government’s plan to popularise electric vehicles (EVs) and phase out the sale of fossil fueldriven vehicles beginning 2023 can put at risk the planned investments of more than Rs 1.2 lakh crore in city gas distribution business, company executives said.
Niti Aayog, which is leading the policymaking effort for accelerated penetration of EVs in the country, has reportedly proposed that only electric vehicles be sold after 2030.
The proposed phase-out timelines for different categories of fossil fuel-driven vehicles are: April 2023 for three-wheelers, April 2025 for twowheelers below 150 cc, and April 2026 for taxis.
The EV policy drive, which has unnerved automakers, is also scaring many companies that have won city gas distribution licences in recent auctions.
“This will be disastrous for the city gas business,” said an executive at a state-run city gas company that has licenses for several areas.
The EV push has created confusion among new licensees and may lead to companies missing work programme targets they had quoted to win licences and slow down investments in the sector, multiple executives at city gas firms said.
“With such bleak future for the industry, banks will not lend for city gas projects,” said another executive.
Executives did not want to be named for the fear of annoying the government.
Indian Oil, Hindustan Petroleum, Bharat Petroleum, Adani Gas and Manila-based AG-P did not respond to ET’s emailed query on how the government’s EV push would impact them.
In just about a year, the downstream regulator has awarded licences for 136 geographical areas covering about half of India’s population.
To win licences, the 20-odd state-run and private companies have pledged to build 7,200 compressed natural gas (CNG) stations, connect 3.5 crore homes with gas pipelines, and lay 156,000 inch-km of pipeline by March 2029.
This, as per the regulator, would require an investment of Rs 1.2 lakh crore.
Expansion plans by older licensees would require additional investment.
EV’s invasion would hurt sale of CNG, city gas distributors’ most profitable business.
CNG makes up three-fourths of the sales revenue of Indraprastha Gas (IGL) and twothirds of Mahanagar Gas (MGL).
IGL and MGL mainly operate in Delhi and Mumbai, respectively.
Gujarat Gas, which operates in much of industrialised Gujarat, sells a fifth of its gas volume as CNG.
Three-wheelers and taxis are primary customers of the economical fuel besides city buses as private car owners prefer not to wait in long lines outside CNG stations for refilling.
Two-wheelers mainly use petrol and their conversion to electric is unlikely to affect city gas players.
It is hard to shift households from subsidised LPG to piped gas and when they do, they consume little, an executive said.
“Industries can be big consumers but not every licence area would have the kind of factory population that Gujarat has.
Second, they have alternative cheaper fuels like fuel oil and coal available,” said an executive, adding that exclusion of gas from GST also makes it less attractive.
Executives said it would be hard to build the city gas business without the most profitable segment of CNG.
Moreover, a typical new license area comprises two districts, which means companies need to invest more to reach out to customers, unlike say in densely-populated places like Delhi or Mumbai, they said.
Stock Market
EV push may leave no tanks to fill at CNG pumps, burn gas companies
Download Android App
Share in 
FullScreen CheckVideos
| Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021 |
Buy Our Merchandise (Peace Series)
- Details
- Category: Stock Market
21