Mahanagar Gas Limited (MGL), one of India's leading natural gas distribution companies, is planning a Capex of Rs. 650 - 700 crore during FY22.  

The Mumbai based company has already spent Capex of around Rs. 500 crore up to December, 2021 and FY22 Capex could be nearly between Rs. 650 - 700 crore.

MGL continues to expand its network in the existing license areas. During the third quarter of FY22, the company connected 75,247 domestic households, thus establishing connectivity for nearly 1.79 million households. It laid 87.47 kilometer of steel and Polyethylene (PE) pipelines thereby taking the aggregated pipeline length to about 6,096 kilometers. It has added two new Compressed Natural Gas (CNG) stations and with these it currently has 278 stations. The company has also added 77 industrial and commercial customers and so far has 4,254 industrial and commercial customers.

The company is confident that it is better placed compared to some other CGDs (City Gas Distribution) because of its ground level infrastructure and marginal last mile Capex that can get it incremental volumes.

“We will be open to all opportunities available in the sector and also we will be looking at new businesses which are aligned to our CGD business. So, management is open and if you look at our new initiative we have started LNG stations also so that that there we are targeting some amount of Capex, but as of now there are no firmed up proposals and we will be open to new proposals,” said Sanjib Datta, Managing Director, MGL during the earnings conference call on unaudited financial results for the Quarter ended December 31, 2022.

“CGD is probably the one sector where there is this potential where gas can increase so that is the other factor in place. There is a compulsion on the government also that they cannot just abandon the sector or if it aligns with the sector there are a lot of things which make it align with the current government priorities be it climate change, be it reduction in import dependence or reduction in oil dependence, increase in the share of gas to 15%, in your primary energy basket, then grass root level, at district level now gas infrastructure is going to reach a lot of people so there is some mileage in that also. So just giving out licenses and nothing happening on the ground I do not think is the intent of the government,” commented Datta.

In the recently concluded 11th CGD bidding round, conducted by Petroleum and Natural Gas Regulatory Board (PNGRB), MGL had submitted its bid for Nagpur, Chandrapura, Wardha, Baloda Bazar, Gariaband, and Raipur. The bids were opened on January 14, 2022 and despite having put in aggressive bids the company has not been successful in securing authorization.

MGL hopes that the eight-year minimum work program commitment basis which the authorizations won by CGD entities get fulfilled, else the very objective of awarding such authorization would get defeated. 

On the lack of policy support and clarity from the government’s side, Datta said, “The policy is in the government's hand. It is difficult for any CGD company to say what is going to happen in the future, but having said that in whichever way things go if there is a large shortfall in availability of gas and at least we do not have the disadvantage of serving many, many more virgin GAs and putting in huge amount of Capex etc., so in that way one point of view is we are better placed compared to some other CGDs because we already have got infrastructure in the ground and with marginal last mile capex. We can get incremental volumes. Only time can tell what direction the government will take.”