On road to a gas-based economy?

MP Sukumaran Nair | Updated on: Dec 17, 2018
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Cheaper and eco-friendly, the Centre’s thrust on natural gas is welcome. But raising supply will be a challenge

Prime Minister Narendra Modi said the other day that the country will be shifting to a gas-based economy in a few years. This would, indeed, be a welcome development from the point of both cost of energy and betterment of the environment. The Prime Minister has laid the foundation for the ninth bidding for city gas distribution (CGD) projects, under the Petroleum and Natural Gas Regulatory Board (PNGRB), covering 129 districts and 65 geographical areas (GAs). The PM also launched tenth CGD bidding round in 50 GAs spread over 124 districts in 14 States.

With this it is expected that 200 lakh households will have piped gas connectivity very soon. Natural gas, predominantly methane, is a cheap and environment-friendly fuel and currently the country consumes around 45 million tonnes of oil equivalent (mtoe) of natural gas, which comes to nearly 6.2 per cent of its primary energy consumption.

Globally, natural gas constitutes 24 per cent of the primary energy consumption. In India, Gujarat, which has relatively better access to natural gas, is having a share of 25 per cent in its energy basket. The government proposes to increase the share of natural gas in the whole of its energy consumption to 15 per cent by 2020.

Low emission

A major advantage of this fuel is that it has very low emission of particulate matter. Often, cities are blamed for increased suspended particulate matter (SPM) levels in the atmosphere. Providing gas linkage to domestic households, the automobile sector, and small and major industries will play a major role in elevating the social status of the people.

The economic advantage of gas over other conventional fuels is that it is 40 per cent cheaper than liquefied petroleum gas (LPG). Compressed natural gas (CNG), often a substitute for petrol and diesel, is 60 per cent cheaper than gasoline and 45 per cent cheaper than diesel. Therefore, the additional savings in, say, taxi driver bills, which, if ploughed back into productive areas such as education of children, will pave way for a faster socio-economic development. This is evident in some of the areas in the country where natural gas has become available for use of common man for over a decade.

As of November 2018, there were 1,491 CNG stations, 1,90,836 CNG vehicles, and 46,40,998 domestic, 27,097 commercial and 8,278 industrial connections in the country. Currently, there are 16,226 km of gas pipelines having a capacity of 368.5 million standard cubic meters per day (mmscmd). Another 11,216 km of pipeline is under construction (one mmscmd is equivalent to 220 MW of electric power).

Read More: Centre to spend Rs 70,000 cr for gas pipeline network

Natural gas is either produced domestically or imported as LNG. It is produced in Assam, Bombay High, Krishna Godavari basin and the Cauvery basin. Also, the country has four LNG import terminals — Dehej and Hazira in Gujarat, Dhabol in Maharashtra and Kochi in Kerala — having a capacity of 26.7 million tonnes per annum (mmtpa).

Two more LNG terminals — one in Ennore, Tamil Nadu and the other one in Dhamra in Odisha — are under construction.

Along with the promotional efforts to shift to a gas-based economy and consequent growing demand, it is necessary ensure ready availability of natural gas.

This is a major problem that will have to be tackled effectively through a realistic plan of action. During 2017-18, natural gas consumption was 58,059 million standard cubic meters (mmscm) and the import dependency was 45.6 per cent.

Production lagging

Domestic production, especially from the KG gas-fields, has not been encouraging and that is why the country is still a large importer of gas, especially from Qatar.

But even the current level of imports isn’t sufficient to meet the gas requirements of major consumers such as the power generation and fertiliser sectors.

Therefore, India will have to embark on a balanced approach to develop indigenous gas resources, maybe through technology intensive deeper drilling techniques and large scale import tie-ups. With the expansion of the CGD network, the demand from households and the automobile and small industry segments are likely to go up considerably. Unless the supplies are enhanced, the infrastructure built may remain unutilised for years.

Energy consumption in India is growing at 4.2 per cent per annum, which is the fastest among major economies of the world.

A shift to a gas-based economy will ensure both availability and affordability. Availability may be ensured by increasing production or import, developing the requisite delivery infrastructure — terminals, stations and pipelines — and giving priority for CGD allocation.

In the present context, the government is giving CGD a prominent place in its development agenda. Now, 14 per cent of the total gas available is reserved for CGD. Still, India’s per capita gas consumption is only 7 per cent of the world average, which stands at 0.42 tonne of oil equivalent.

At present, more than half of the total installed capacity of natural gas-based power of 24,842 MW remains idle for want of domestic gas.

With domestic production of gas stagnating and consumption growing at a CAGR of 4.5 per cent, there’s still a long way to go for transforming the economy to a gas-based one.

The writer is a former chairman of the Public Sector Restructuring & Audit Board and Secretary to the Chief Minister of Kerala.

Published on December 18, 2018

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