Ultra Gas & Energy to invest ₹4,500 crore to set up 300 LNG storage facilities

M Ramesh | | Updated on: Jun 26, 2022
Mukundan Iyer, CEO, UGE

Mukundan Iyer, CEO, UGE

The company sees a future in supplying gas to industrial consumers, especially MSMEs

Ultra Gas and Energy (UGE) is planning to set up 300 liquefied natural gas (LNG) storage facilities across the country from where it will truck the gas to industries.

Speaking to BusinessLine, Mukundan Iyer, CEO, UGE said that each storage facility and the cryogenic trucks linked to it would cost between ₹12 crore and ₹15 crore, which means an investment of about ₹4,500 crore over the next three-to-four years.

Set up in 2020 by a group of NRI investors and some funds, the company sees a future in supplying gas to industrial consumers, especially micro, small and medium enterprises MSMEs(MSMEs).

According to Iyer, piped gas method is not suitable as pipelines cannot reach the doorstep of every customer, especially whose demand is small.

A much better way, Iyer said, would be to set up small storage facilities at the customers’ premises and keep topping up the gas by supply vehicles that would carry the fuel from the big storage facilities to the customer.

Each of the 300 storage facilities would be capable of dispensing 50 tons of LNG a day. The first 20 of these facilities are expected to be operational by the end of this year. And, the rest will be set up by 2023-24, Iyer added. Typically, each storage facility would cater to five-to-six MSME or ‘hotels, restaurants, cafe’ (HORECA) customers.

The trucks themselves would be powered by LNG, therefore, several hundred trucks crisscrossing the country would still not be polluting, Iyer said.

On the cost of LNG—which is around $32-33 a MMBTU—Iyer noted that several new LNG production (liquefaction) facilities were coming up in Russia, Qatar and Australia. As such, prices would moderate in a few years.

LNG is a much greener fuel than furnace oil (that is mostly in use today), with about 30 per cent reduction in carbon dioxide emissions. The gas, however, is costlier. To offset the higher costs, UGE is working on getting its customers carbon credits that they can sell in the market.

Published on June 26, 2022
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