State-run GAIL on Thursday said that it will set up liquefied natural gas (LNG) retailing outlets, which will cater to medium and heavy commercial vehicles, along major national highways (NHs) and aims to capture more than 50 per cent market share by 2030.

The Maharatna company will invest ₹650 crore in the venture, under which LNG filling stations will be set up along the Golden Quadrilateral, major NHs and mining hubs.

In August last year, the country’s largest gas utility announced plans to set up LNG filling stations, particularly in the long-haul, heavy-duty logistics sector.

“LNG business has the potential to grow substantially. GAIL can take a central role in driving this growth and aspire to capture 50 per cent plus market share in next five-six years. This will help GAIL in the retail LNG sector, leading to an increase in natural gas portfolio. By converting transport fuel from diesel to LNG, reduction in carbon footprint is envisaged,” the CPSE said in a BSE filing.

The natural gas industry is focusing on retail LNG by increasing usage of the commodity as a transportation fuel. Proposed line of business investment is strategic in nature which relates to exploring opportunity-based investment for the development of LNG dispensing infrastructures and last mile connectivity along golden quadrilateral, NHs and mining areas as alternatives to diesel meant to serve customers with fuel having lower carbon footprints, it added.

Transition fuel

The development assumes importance as LNG is considered a greener alternative to diesel-run vehicles and can help reduce pollution and emissions. Besides, it will help in increasing use of natural gas and raising its share in India’s energy mix to 15 per cent from around 6.7 per cent currently.

In August 2023, GAIL Chairman SK Gupta said the firm is developing an LNG supply value chain to develop new markets and increase consumption of natural gas. The present focus is on developing a retail LNG network and installation of infrastructure inclusive of LNG dispensing stations, small scale LNG skids, etc to increase its reach to newer customer segments.

LNG emits 30 per cent less CO2, 100 per cent less Sulphur Oxides (Sox), 59 per cent less Nitrogen Oxides (NOx) and 91 per cent less Particulate Matter (PM).

India imports roughly half of its requirement of natural gas as LNG. During the April-January period in FY24, the country imported 25,305 million standard cubic meters (MSCM) of gas, against 26,304 MSCM in FY23 and 31,028 MSCM in FY22.

Government support needed

A spokesperson for Ultra Gas & Energy, which operates LNG hubs in Sriperumbudur (Tamil Nadu) and Anand (Gujarat), said that India has huge potential for LNG hubs or retail points, considering that India has around four million trucks of various capacities.

Currently, setting up a LNG hub takes time due to various Central and State government clearances. Setting up a single-window clearance medium can fast-track the implementation.

The government can also aid the sector by conceptualising a policy for LNG. The policy should offer incentives such as those provided for the adoption and proliferation of electric vehicles (EV).

Another issue that needs to be addressed is that VAT rates across states for auto LNG ranges from 5 per cent to 28 per cent, which needs to be addressed. Besides, for the sector to take off, the GST on LNG vehicles, which is at 28 per cent, also needs to be reduced.