Mahanagar Gas (MGL), which supplies gas to households and vehicles in Mumbai, is in discussions with four prospective gas suppliers for the supply of one million cubic meters per day (mcmd) of gas at a price of $4-6 million British thermal unit (mBtu) as it plans to expand its network to other cities in Maharashtra.
MGL, an equal joint venture between British Gas and GAIL, is talking to GAIL, the largest gas marketer, Oil and Natural Gas Corporation (ONGC), the largest gas producer and Petronet LNG and Shell Hazira, both importers of liquefied natural gas. MGL, which buys subsidised gas at around $2 per mBtu, is likely to see a rise in its fuel bill as the gas prices have gone up in tandem with the oil prices.
“We are very close to signing the deal and will get an additional one million mcmd gas in this financial year. We have laid an integrated network and will be connecting it to our our second city gate station at Mahape,” said P K Gupta, Managing Director, MGL.
MGL has been getting 1.5 mcmd from ONGC’s Bombay High field. The gas from this field is sold at subsidised rates. The imported gas from Petronet LNG and Shell however, will be around three times more expensive for the company. “We are concentrating on improving our efficiency. We are also looking at pooling the gas from different sources, so the varied prices do not affect our consumers much,” added Gupta.
MGL sells natural gas to households, vehicles and industrial and commercial consumers in Mumbai, Thane and Mira-Bhayander districts and will begin operations in Navi Mumbai this year. It is also planning to expand its network to other cities in Maharashtra.
The company has 3.5 lakh domestic customers, 2 lakh state-owned vehicles and over 5,000 private vehicles running on compressed natural gas (CNG). It also supplies gas to 30 industrial units and nearly 1,000 commercial establishments such as restaurants, hotels, crematorium and religious institutions. MGL has laid 2600 kms of pipeline in Mumbai and adjoining areas so far.
“When MGL started its operations in Mumbai in 1995, it was operating only on gas supply from ONGC’s Bombay High. Since that availability was restricted and gas supply started diminishing after its peak production, we could not expand as we wanted to. The demand for domestic and commercial needs is increasing and we need gas for catering to the same. We are in talks with various players to ensure that while we expand, our existing network does not suffer,” said Gupta.
According to a Ernst & Young study, the city gas distribution networks are expected to spread to 40 cities across the country by the end of 2011-12 and attract an investment of $2.3 billion. GAIL, which has joint ventures operating city gas projects across the country, alone plans to invest $1.3 billion in spreading its network.
