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MGL signed an MOU with BMC for setting up a Compressed Biogas plant in Mumbai
Mahanagar Gas Limited signed an MOU with Brihanmumbai Municipal Corporation (BMC) for setting up a Compressed Biogas (CBG) plant in Mumbai. The CBG plant will have the capacity to process up to 1000 TPD of source segregated food and vegetable waste and will be set up on a parcel of land to be provided by BMC, shared Sanjay Shende, Deputy Managing Director, Mahanagar Gas Limited in an interview with Energetica India.
Que: How has Mahanagar Gas Limited (MGL) strategically positioned itself to mitigate the impact of gas price volatility, considering the current market dynamics?
Ans: The implementation of a new domestic gas pricing policy has brought much-needed relief to the CGD sector. Post submission of Kirit Parikh Committee Report, the Government of India issued revised domestic gas pricing guidelines in April 2023. Under the approved guidelines, the APM gas price will be determined at 10 percent of the monthly average of the Indian crude basket and will be notified on a monthly basis. The guidelines also have a ceiling of USD 6.5 per MMBtu and a floor of USD 4 per MMBtu for the next two years. After that, the floor and ceiling prices will increase by 25 cents every year.
These guidelines played a crucial role in stabilizing prices, mitigating the risk of sudden price hikes, and thereby alleviating inflationary pressures to ensure a more stable price.
The revised guidelines are now linked to crude oil prices, a practice that is currently followed in most industry contracts and more relevant to the country’s consumption basket and has deeper liquidity in global trading markets on a real-time basis.
Moreover, there has been a notable decrease in LNG price compared to last year, especially in August-September, where it fluctuated between USD 35 to USD 40 per MMBtu. Presently, prices are at approximately USD 15 to USD 16 per MMBtu. MGL has implemented proactive measures to mitigate the impact of such volatility, maintaining a diversified portfolio of gas sourcing. The company has entered into term contracts with Reliance Industries Ltd and BP Exploration (Alpha) Ltd. for Gas from High Pressure High Temperature (HPHT) fields, and has also entered into contracts with GAIL for Henry Hub indexed pricing.
Consequently, MGL has adopted a strategy to diversify the duration and indices of gas prices.
Que: Could you provide insights into MGL’s term contracts with Reliance Gas for High Pressure High Temperature (HPHT) gas and agreements with GAIL for Henry Hub?
Ans: In order to ensure supply security and to mitigate the price volatility risk, MGL signed term gas contracts with Reliance Industries Ltd and BP Exploration (Alpha) Ltd. for 0.6 MMSCMD under HPHT and with GAIL for Henry Hub RLNG 0.78 MMSCMD (Henry Hub) to cater to the demand over and above APM allocation as well as meet its industrial and commercial supplies.
Que: With 90 percent of PNG and CNG being sourced domestically, how is MGL planning to align with national production trends? ¬
Ans: Around 80 percent of the priority segment requirement is met through APM gas and for the balance, as outlined above, we have in place a term contract with RIL as well as with GAIL to meet the requirement of priority segment as well as industrial and commercial segment.
Que: How does MGL view the government’s recent policy prioritizing City Gas Distribution (CGD), and what impact does it foresee on meeting the company’s needs?
Ans: A major portion of the demand for D-PNG and CNG segment is catered through government-allocated APM gas. Also, the Government’s notification regarding High Pressure High Temperature (HPHT) Gas allocation priority to CGD is another positive step for D-PNG and CNG segment. These guidelines were effective in maintaining price stability and reducing inflationary pressures.
Que: MGL has set a goal of establishing around 50 CNG stations annually. Can you share more details about this expansion plan and its geographical focus?
Ans: MGL has planned to set up 50 CNG stations annually primarily in Mumbai, Thane and Raigad District of which 25 CNG outlets are expected in Mumbai and Thane District and the balance 25 CNG outlets in Raigad district. MGL has issued letters of intent to private plot owners and procured sites from private plot owners and government agencies.
MGL has recently executed an agreement with Reliance BP Mobility Limited which will additionally help MGL expand CNG Outlets in Thane and Raigad Districts.
Que: MGL emphasizes the growth of the CGD sector contributing to India’s energy security. How does MGL see its role in achieving the government’s goal of increasing gas’s contribution from 6 percent to 15 percent?
Ans: MGL believes it can play a pivotal role in GOI’s endeavour to increase the share of natural gas in India’s energy basket from 6 percent to 15 percent. Aligned with the government’s ambitious goal of elevating gas contribution from 6 percent to 15 percent, MGL is dedicated to augmenting its core CNG and PNG infrastructure. This involves expanding the network of CNG stations and increasing the customer base in residential, commercial, and industrial establishments.
In a strategic move towards sustainability, MGL is diversifying into alternative green fuels, specifically Compressed Biogas (CBG) and Liquified Natural Gas (LNG). To realize this vision, MGL is setting up one of the largest MSW to CBG plants in Asia in Mumbai. MGL is also rolling out LNG stations to develop the LNG ecosystem enabling the switch from diesel to LNG for long haul transportation. Currently, MGL operates one LNG station at Savroli, Khalapur and has plans to add 6 nos. of stations in Maharashtra through its JV Mahanagar LNG Pvt. Ltd. The primary objective includes enhancing access to clean and affordable natural gas, promoting its utilization across various sectors, and collaborating with stakeholders to facilitate policy initiatives that support this growth.
Through these multifaceted endeavours, MGL aspires to make a substantial contribution towards attaining the national target of increasing the share of natural gas in India’s energy mix.
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