IGL wants to be leader in LNG space, says MD Kamal Kishore Chatiwal

Chatiwal talks about strengthening efforts to establish CNG to LNG conversion plants for servicing difficult terrains

The state-run Indraprastha Gas Limited (IGL) will set up 100 liquified natural gas (LNG) stations by FY30 and strengthen efforts to establish compressed natural gas (CNG) to LNG conversion plants for servicing difficult terrains, Managing Director Kamal Kishore Chatiwal tells Subhayan Chakraborty & Shreya Jai in an interview at the Delhi headquarters. Edited excerpts:

IGL has announced multiple plans to ramp up its LNG portfolio. What is the thinking behind this?

We want to be a leader in the LNG space. We are targeting to set up 6-7 LNG dispensing stations nationwide in the current financial year, and our long-term vision is to have 100 LNG stations by FY30. We have already commissioned the first LNG dispensing station in Ajmer. There is demand in Delhi. As part of our partnership with a leading public sector company, IGL is building a captive unit at its Gautam Buddh Nagar depot. It wants to decarbonise its trucks, which will ply as soon as the facility is commissioned. 

What is the status of your LNG to CNG conversion plants?

We believe there is a synergy between CNG and LNG. For the conversion plants, we have brought out an expression of interest. We now have 500 CNG stations in Delhi. For instance, a station making 20,000 kg of CNG sales per day has seen sales come down to 10,000 kg. This presents a potential for us to use the compression capacity in that station. We can liquefy a high-pressure gas. We already have a highly compressed gas, so our capex goes down.

In hilly areas, pipelines are uneconomical in terms of cost and have safety issues. So, we plan to deliver gas via pipeline to a CNG compression facility, liquify it, and take the LNG to hills, inaccessible or sparsely populated areas. Right now, it costs Rs 14-15 crore to set up a conversion unit, as opposed to the hundreds of crores it takes to lay down pipelines.

What about compressed biogas plants?

We have targeted to construct 15 CBG plants in this financial year, but work will be completed on a minimum of 10 plants. It takes 6-7 months for construction. We are hopeful of producing biomethane from the biogas projects, going forward. A country as small as Germany is producing 8 million tonnes, whereas India is importing 23-24 million tonnes. Since biowaste production is related to population, India has the potential to generate 8-10 times more biomethane. But the biomethane has to be integrated with CGD, and not as a transport fuel. As a transport fuel, where it will just be an intermittent option.

Can you give us a timeline for biomethane production?
 

The agencies involved are looking at short-term targets. We need land, segregation of waste, and sewage plants. Everybody, including households, has to contribute towards this. In Delhi, we are setting up 2-3 smaller projects. We are in discussions with the Municipal Corporation of Delhi to take care of the Bhalswa landfill in North Delhi, which is emitting huge amounts of biomethane into the atmosphere. The MCD has asked to know how much per square metre intensity can be achieved in terms of waste removal. We are in discussions with some technology suppliers. The investment will be made by a joint venture entity, set up with the technology provider. The Delhi government will give us the land. We will guarantee them the offtake based on existing government policies.

What is the investment outlook for this?

Delhi generates 15,000 tonnes of waste daily. We are looking at treating about 20 per cent of that or 2,000-3,000 tonnes. Normally, 100 tonnes of waste require Rs 50 crore of investment. Once the scale goes up, and capex efficiency comes in, the investment reduces. So, for a 1000-2000-tonne plant, an investment of Rs 300-350 crore may be required. Capex is not a constraint because it has a life of 25 years. The cost per standard cubic meter of gas generated is very limited. What matters is the consistency in operation and the product quality, the lack of which can damage the infrastructure. The gas imported from Qatar, and the US, is almost pure methane, with very few impurities. Our focus is on bringing that quality to biomethane.

What can be done to hedge against global gas price volatility?

From an Indian perspective, we need strategic gas storage, which all developed countries have. India is blessed with onshore gas fields which are depleted and can be used for storage. In times of increased volatility in global prices, these can come into play. A policy push with capex support for strategic storage of 20-30 billion cubic meters (bcm) of natural gas is required from the government. Given an option, IGL would also book some capacity there. No one wants to be exposed to price volatility.  During the Covid pandemic, global prices were at $1-2 per mmBtu. If we had storage, it could have been filed up. Prices shot up to $50 per mmBBtu when the Ukraine war began.

What are your plans for green hydrogen?
 

Hydrogen remains in a nascent stage. There is no commercially proven business model and prices are still very high. It is still 2-3 times the normal energy cost. If India needs to grow at 8 or 10 per cent for the next 10-15 years, we need cheap energy. It is possible to blend hydrogen in natural gas up to 1-2 per cent. I'm not sure whether it will make a big difference or not.

How significant a threat are EVs to your CNG business?

Electric vehicles will increase in percentage terms, but not in a dramatic manner, whereby they reach 50-60 per cent. EVs will continue to grow but won't replace all vehicles and threaten the other players with extinction.