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Fuel Retailing – Pricing, Technology & Emerging
Business Models
GASEOUS FUEL RETAILING
NORTH EAST
2nd NOVEMBER 2010
Kunal Mazumder
Assam Gas Company Ltd
Duliajan Assam
CONTENTS
1
Assam Gas Company Ltd
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Joint Ventures : TNGCL
• Established Tripura Natural Gas Co Ltd (TNGCL) at Agartala with TIDC in 1989.
- Investment of Rs 25.00 Lakhs
- Present stake 10%
• The only other company in gas retailing in North East
- 7000 domestic & over 100 commercial consumers
- 2 CNG stations servicing nearly 2000 autos & light vehicles
(only CNG stations in North East)
- 20 industrial consumers
• 260 kms of PE & 2 kms of steel pipelines
3
Joint Ventures : DNP Ltd
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List of Firsts
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Limited Geographies
• In the 1970s, Natural Gas was produced primarily in Assam and Gujarat in
India
• OIL and AGCL joined hands to utilize this natural gas and reduce flaring
• Operating only in areas where natural gas is available, namely
five districts of upper Assam & in Barak Valley of south Assam
• Earlier usage of Natural Gas was limited to geographies where it was easily
available. In Assam, situation has not changed.
• Gas finds and present availability do not justify laying of long distance pipelines
in the region
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Operational Area
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Infrastructure
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Sources
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Sectors : Consumers
8 TEA & TOWN Upper Assam 0.628 Tea & Town OIL & CRL
TOTAL 6.048
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Gas Retailing in North East : Issues
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Challenges : Gas Retailing to the Tea Industry
• Stranded associated gas which was otherwise being flared is mainly used for
the retail business. Consumers used to low cost gas are not willing to pay
present market rates.
• In most places outside North East, industries are usually located close to each
other in industrial parks / areas where gas delivery is easier.
• The 350 + tea factories currently using gas from AGCL are spread over 5
districts with several kms separating each factory from the other. Most of these
factories are deep in the hinterland away from trunk pipeline routes.
• Moreover the tea industry is seasonal : their demand peaks at the same time
within the day, have the same weekly off day, demand gradually increases
from April peaking during August and rapidly tapering off and close for the
winters in December.
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Challenges : Gas Retailing to Town Consumers
• Each of the ten towns where piped natural gas is being supplied are small.
• Very few high rises (2+ storied !)
• Large number of consumers’ houses are like bungalows with large front yard
and kitchen at the tail end of the premises
• High infrastructure cost of supplying gas.
• No demarcated tracks for utility services in towns
• Since alternative non gaseous fuels are easily available, cost becomes an
important determinant for the consumer.
• No industrial parks near the towns
• Commercial vehicles such as Autos are diesel driven and therefore conversion
to CNG low possibility. No CNG stations in Assam as yet. 14
PNG & LPG
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Challenges & Opportunities
• Demand pockets exists within operational areas but volumes do not justify
laying of pipelines. Transportation costs will be very high.
• Laying pipelines across rivers for low quantities of gas not viable
• Good demand exists in non operational areas but where is the gas going to
come from ?
• Existing producers unable to commit even 1.0 MMSCMD. New gas finds at
market rates are in ‘000s SCMD.
• Gas to Guwahati :
- High demand from residential and commercial establishments
- Industrial estates within and near the city
- Stranded power plant near Guwahati without any viable fuel to run it 16
Supply Infrastructure & Growth
• Existing gas pipeline extends only 200 kms westward from Duliajan.
• At least 800 kms of trunk pipelines required to cover the south bank of river
Brahmaputra upto Guwahati where major towns are located and the north
bank beyond Guwahati upto Bongaigaon.
• To connect with national gas grid at Siliguri in West Bengal
• High volume of investments required in transportation via pipelines
• Current additional demand excess of 3.0 MMSCMD
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Proposed Trunk Lines
Numaligarh - Guwahati
North Bank
Guwahati - Bongaigaon
Bongaigaon - Siliguri
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Opportunities
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Opportunities
• Seek partners to build pipelines to connect to national grid and make natural
gas available in other parts of the North East
• Potential areas : Nagaon, Jagiroad, greater Guwahati, Bongaigaon in Assam
Byrnihat in Meghalaya
Dimapur in Nagaland
• Due to perpetual shortage of LPG cylinders, huge market exists for PNG in the
domestic and commercial sectors
• Open up the CNG as automotive fuel in the entire North East using LNG
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Strategic Steps
• AGCL may seek strategic alliance with companies such as GAIL to be its
partner in the North East to connect to National Gas Grid
• Benefits :
- Availability of imported gas through proposed LNG terminal at east coast
- Linkage with National Gas Grid thru’ GAIL’s network
- Make gas available to western & central Assam
• Request Govt of India for
- Viability Gap Funding
- Upfront Capex Subsidy
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Thank You
Kunal Mazumder
Assam Gas Company Ltd
P.O. Duliajan Assam
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