Indraprastha expects petrol price hike to boost gas sales

The increase in retail price of petrol and diesel has given a reason for Indraprastha Gas Ltd to cheer. It is looking at more sales of compressed natural gas (CNG) to make good of the price advantage that if offers as a transportation fuel.

According to the company, at current levels CNG offers a 68 per cent advantage compared with petrol and 36 per cent when compared with diesel.

The company, which has the mandate to sell CNG and piped natural gas in the national capital region, is increasing its network through a Rs 207 crore expansion plan. It is approaching the goverments of Haryana and Uttar Pradesh for tax concessions on the grounds of it being environment friendly.

It has also written a letter to the Uttar Pradesh government seeking exemption from sales tax. There is no separate sales tax on CNG in Uttar Pradesh but natural gas is taxed at a rate of 20 per cent. The Delhi government has given sales tax exemption to CNG.

IGL managing director A K De said even if natural gas prices were increased, CNG would continue to have a relative advantage over auto LPG, petrol and diesel.

CNG is currently sold at Rs 16.88 a kilogramme in Delhi. A litre of petrol costs Rs 37.84, while diesel is Rs 26.26. Auto LPG costs Rs 20.04 a litre.

He said that the only hurdle barring private vehicles from using CNG was the conversion kits and endorsements by the road transport authorities. "Only 10,200 private cars out of six lakh-plus cars on the Delhi roads have CNG kits.

De said the board recently approved the first phase of expansion with an investment plan of Rs 166.5 crore. The company would be setting up six CNG stations each in Faridabad and Gurgaon in Haryana, and eight in Noida and Ghaziabad in Uttar Pradesh over three years.

The second phase of Rs 40.5 crore will be taken up in the following two years. He said the demand for CNG has stagnated in the commercial vehicle segment in Delhi following a Supreme Court order which stopped registration of more CNG three-wheelers. The only immediate addition in this category would be 46,000 light commercial vehicles by April 2005.

The growth in sales will be seen primarily in the piped natural gas segment where the company plans to add 17,000 connections to the existing 18,000, he said.