AG&P Pratham to expand CNG stations to 420, serve 1 lakh households in FY23

City gas distribution (CGD) player, AG&P Pratham, which has commissioned 201 CNG stations across five states, will expand to 420 stations in FY23.

In an interview with BusinessLine, the Chief Marketing Officer (CMO) and Director (Commercial), Vinukumar Balakrishnan, said the target is to serve 1 lakh households in the current fiscal. Excerpts:

What does your investment pipeline look like in FY23?

We have commissioned 200 CNG stations across five states, which is a milestone for us. On August 23, we inaugurated our 201st station in Mysuru. On ground, we have deployed ₹1,500 crore. We have created last mile infrastructure for around 62,000 households, of which 18,000 have been commercialised. Besides 325 km of trunk pipeline has been laid. By the end of FY23, we expect to lay 750 km of pipeline, with 420 CNG stations and service 1 lakh households at an outlay of ₹2,400 crore.

What has been your experience with CGD in north and south India?

Overall, Rajasthan is a more developed market with an ecosystem and awareness. In Jodhpur, you don’t have to explain what CNG is. But, when we started about 12-14 months back in Ramanathapuram, it was the first CNG station for Tamil Nadu. In Karnataka, there was no station outside Bengaluru . In Kerala, CNG is available only in Ernakulam. Almost 80-85 per cent of our capex is in south India, where we have 11 GAs.

In the South, we are focusing on the ecosystem, and so you have to get the dealers to start selling CNG vehicles and retro-fitters to open shops. Then, you have to parallelly spend a lot of time and energy on building awareness about CNG. There is better awareness in North India. There are exceptions too. For instance, we have a GA in Gulbarga, and there is better awareness about CNG as they are close to Hyderabad, which has CNG. So with an ecosystem, it becomes easy.

How do you visualise CNG gaining traction as an auto fuel?

In terms of growth, Jodhour is growing as it is on the Delhi-Mumbai corridor. Currently corridors are being created such as the Chennai-Bengalure, Bengaluru-Mangaluru, Bengaluru-Hyderabad, and even Chennai-Mumbai. They can be run purely on CNG and some transporters have already started. If you see the new CNG vehicle bookings, particularly 3-wheelers and 4-wheelers, there is an almost 6-8 months waiting period to get delivery in some models. So the interest is good and encouraging.

What are your views on high LNG prices?

The scenario could be different for the CGD industry. The priority sector being CNG and domestic PNG, so we are getting domestic gas. The Government has been supportive in ensuring that we have supplies through these bad times. As an organisation, our investors and management believes that this is a passing phase. It is a short-term phenomenon and we should be able to push this through.

We are taking a long-term view, a reason we are still rolling out infrastructure. What we did is that last time in anticipation of the winter, we entered into some long-term agreements, which has helped us through these times. Yes, as an industry, it is a problem. It is not just a price crisis, it is a volume crisis. Sometimes, you are ready to pay the price, but volumes are not there.

When do you expect LNG prices to soften?

Our expectation was to see an easinng before the winter, but I think that phase is almost through and in some parts of Europe, winter is setting in. As we stand today, we don’t see any price softening before the winter. I think better gas prices are probably some time away.

How do you see AG&P growing as a player in sustainable mobility?

In the long run, we don’t just see ourselves as a CGD entity, but a green energy solutions player. At best, we look at CNG as a transition fuel for the next 5-10 years, because it is difficult for us today to anticipate how EVs or green hydrogen will develop, as there is a significant amount of R&D and capex that has to go into that. But it is inevitable. We are looking at the hydrogen market seriously, but right now it is at an experimental stage and we don’t have R&D capabilities as of now in India. So we probably have a year or a year-and-a-half before we start experimenting, but definitely it is one of those things we are monitoring very seriously.

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