Union minister of petroleum and natural gas Ram Naik told parliament on Wednesday that there were limitations to supplying CNG as production from the Oil and Natural Gas Corporation (ONGC) gas fields was declining. “Any diversion of the committed supplies to the vital sectors like power and fertiliser will affect them adversely,” he pointed out (Financial Express, July 26, 2001).

“The real glitch is that there is simply not enough CNG to go around. Did it occur to anyone to stock up on the fuel the minute the court issued its orders? Of course not” (The Times of India, March 28, 2001).


Fact
MOPNG is trying to project that an acute fuel crisis is about to hit public transport. They have inflated demand projections of CNG much beyond the estimates by Indraprastha Gas Limited (IGL) and argue that available gas cannot meet this kind of demand.

This claim comes at a time when IGL fails to meet its commitment to set up all the 80 CNG stations as mandated by the Supreme Court and falls short of converting all the ‘daughter stations’ to ‘daughter-boosters’ to help keep uniform pressure for gas and reduce filling time.

MOPNG is silent on the fact that it is possible to increase allocation for the transport sector. In the meantime more gas has been allocated for affluent households in Delhi to substitute LPG that will not make any impact on the air quality.

MOPNG has suddenly woken up to a new reality — that it has to ensure long-term supply of CNG to the city. But it is also looking for an escape route to avoid making such commitments. The ministry did not take the Supreme Court orders of July 1998 to move the entire public transport system to CNG, seriously. They had only considered buses but not the autos and taxis which were also mandated to move to CNG. Surely 80 CNG stations would not have been ordered by the Supreme Court if only buses had to be catered to. (The real reason for the ministry’s slumber is, as one senior official put it, “We did not expect the orders to be implemented.”)

The ministry has argued that it cannot supply the growing use of CNG by vehicles. But there are several discrepancies in the CNG demand figures given by the Ministry of Petroleum and Natural Gas (MOPNG) and the Indraprastha Gas Ltd. (IGL). According to the Planning Commission, the ministry has allocated 3.07 million standard cubic metre per day (MMSCMD ) that is, 24.76 lakh kg per day (one kg of CNG is equivalent to 1.24 standard cubic metre) of natural gas for Delhi as follows:

    Power:    2.60 MMSCMD (20.97 lakh kg per day)
    Delhi Vidyut Board (DVB): 0.84 MMSCMD (6.77 lakh kg per day)
    Pragati Power: 1.75 MMSCMD (14.11 lakh kg per day)

Others (which includes vehicles and households): 0.48 MMSCMD (3.87 lakh kg per day)

According to the ministry, only an allocation of 0.15 MMSCMD (1.21 lakh kg per day) has been made for vehicles. The rest has apparently been made for households. It is now quite clear from the various estimates available from the IGL and MOPNG that their demand projection has always remained flawed and they are playing around with it to mislead everybody.

According to the submission of IGL on April 4, 2001 to EPCA,

While the total demand of CNG from buses, autos and taxis in April 2001 was 1.00 lakh kg per day the supply capacity was 2.23 lakh kg per day38 (about 0.28 MMSCMD). In other words, according to this estimate, the current demand then was only 51 per cent of the available dispensing capacity.

One bus consumes about 56.5 kg of CNG per day39. Therefore, if 10,000 buses were to run on CNG, the demand from buses only would be 5.65 lakh kg per day (0.7 MMSCMD).

Supply by October 2001 would be 6.65 lakh kg per day (0.82 MMSCMD).40 Thus, there would be excess CNG available even after catering to all the buses. Clearly availability of CNG as such was not a problem according to IGL as on April 2001 (see table 8: Demand and supply).

Thus, demand and supply projections of IGL, made in April 2001, show that the dispensing capacity will always remain ahead of the projected demand till March 2002.

Around the same time, Ram Naik also pointed out that adequate quantity of natural gas was available for the city. According to his estimates presented to the media in the first week of April, there was supply of 1.96 lakh kg per day of CNG as against a demand of 0.95 lakh kg per day. Thus, according to his estimates, the present capacity utilisation was only of about 48.5 per cent.41

But a new game unfolded in the month of July, 2001, when the former managing director Rajiv Sharma was dismissed and with the change of guard the estimates for demand and supply also changed overnight.

Demand and supply projections of IGL, made in April 2001, show that the dispensing capacity will always remain ahead of the projected  demand

In its presentation to EPCA in July 2001, IGL revised its older estimates. In the new estimates, they modified the consumption figures for all vehicles. While according to the old estimates given in April a bus consumed 56.5 kg of CNG per day, the new estimate is that of 70 kg per day. The new daily consumption estimate for cars and taxis was doubled from 4kg to 8 kg and that of three-wheelers from 3 kg to 5 kg.42

The consequence is that the July estimate shows that the dispensing capacity will catch up with demand only in September 2001 once, slide back again and then catch up once more in February, 2002 (see graph 8: CNG demand and dispensing capacity of IGL).
What is the petroleum and natural gas ministry doing about this?

MOPNG is trying to cash in on the existing shortfall to create a sense of an acute fuel crisis to hit public transport in Delhi.

MOPNG has tried to inflate the demand projection of CNG much beyond the IGL estimate. The ministry projects that CNG demand in Delhi will increase to almost 16 lakh kg per day by June 2002 against the present allocation of 1.2 lakh kg per day (see table 9: Inflated). This is an increase of over 13 times. However, if the latest consumption figures as given by IGL are used for the number of vehicles used by MOPNG, the demand goes up to 21.5 lakh kg per day (see table 10: Difference of opinion). IGL now estimates that CNG demand will go up by almost 12 times by March 2002, but the difference between IGL and the ministry’s projection for the per day consumption in 2002 is still in the region of more than 5 lakh kg of gas. The ministry has played around with the number of vehicles very liberally to project very high demand for gas.

The ministry’s estimates are based on a number of erroneous assumptions (see table 10: Difference of opinion). Even when three-wheelers (these are the only light public transport vehicles run on petrol because taxis run on diesel) were allowed to run on petrol their total registered number in January 1999 was about 87,000.44 If the fact that no commercial vehicle more than 15 years old are allowed to operate in Delhi is taken into account, it would bring their number down to about 57,000. Even IGL’s estimate

puts the number of three-wheelers at around 50,000 in March 2002.45 Therefore, the estimate of the ministry is a gross overestimate for autos, almost three times higher than the actual numbers.

The number of cars on CNG, according to the ministry, would be 70,000 in June 2002.46 This again is a clear case of exaggeration. IGL estimates that the number of cars and taxis put together would be around 37,400 in March 2002.47 Thus, the ministry’s estimate is almost double of the actual numbers. The number of registered taxis in 1998 was 1.66 million. After getting rid of more than 15 years old it cannot still exceed maximum 10,000. There is no reason for such dramatic increase in the number of private CNG cars.

MOPNG has projected the demand so high to argue that investment to meet such high level of demand will be quite prohibitive as this would need major improvements in the system, including upgradation of the existing pipeline system from Hazira to Dadri and Delhi (with a length of about 1,145 km), which will involve a huge cost.48

IGL fails to keep its commitments: Supply of CNG fails to keep pace with demand

The long queues for CNG and harrowing experience of the CNG users are legend. IGL has failed to speed up its dispensing capacity and supply to meet the sudden surge in demand for CNG despite its commitments to the EPCA. Once the Supreme Court made it clear that it would not entertain any dilution of its original order, the CNG market that was sluggish initially, picked up and within a very short time a large number of vehicles in different segments rolled in (see table 11: High on gas). IGL was caught unawares.

People are only busy counting the numbers of stations. Even though as many as 74 stations as against the original mandate of 80 stations are in place it is the inadequate dispensing capacity and low pressure levels in each of these stations that have compounded the problem.

Latest projections of demand and supply from IGL show that supply will fall short of demand till the end of 2001 and long queues can be expected till then.

Just in three months IGL has backtracked on many of its earlier commitments to EPCA (see table 12: Yawning gap). In May 2000, IGL had assured that compressors needed to convert all daughter stations to daughter-booster stations (in order to provide speedy dispensing of CNG) were already on their way from Argentina. But these are still not in place.39 Because of these delays there are long queues of cars, autos and buses waiting to get CNG.

Investments delayed

It is obvious that IGL has not made timely investments. IGL had plans to spend Rs 328 crore in the first phase but has spent only Rs 123 crore of that till now.50 Only now when the court order is on its head is IGL thinking of taking a loan of Rs 200 crore from the Oil Industry Development Board. Converting daughter stations to daughter booster stations is the need of the day to increase dispensing capacity. But it is clear that orders for compressors were obviously not placed in time and thus from April 2001 to July 2001 only five daughter stations could be converted to daughter booster stations.

In the meantime the queues for CNG are getting longer and rarely do consumers get a tankful of CNG. Why is this so? There are several issues related to the supply of CNG:

a)    Speedy supply at dispensing stations,
b)    Long-term assurance supply of CNG, and
c)    Reliability of CNG supply

Number of dispensing stations

A researcher of CSE who visited Mumbai in April 2001, found that while Mumbai was dispensing one lakh kg of CNG per day through 22 stations,51 Delhi supplied 0.95 lakh kg of CNG per day through 68 stations,52 that is, over three times the number of dispensing stations than Mumbai. However, by June 2001, the daily sales in Delhi went up to 1.92 lakh kg per day.

Mumbai also has long queues but this is mainly because of a large number of vehicles, not the long time taken in dispensing CNG. In Mumbai, Mahanagar Gas Ltd has to set up more dispensing stations but there is a serious problem of land availability and there is not enough space in existing petrol pumps because of safety requirements for CNG dispensing stations. So why does Delhi with so many dispensing stations have long queues? Several factors are responsible for this.

MOPNG’s projection of demand for CNG in Delhi is based on wrong assumptions and is almost double the estimate of IGL.

Latest projections of demand and supply from IGL show that supply will fall short of demand till the end of 2001 and long queues can be expected till then.

One factor is the lack of an adequate number of compressors. In Delhi, out of 74 stations, 47 are daughter stations of which only eight have compressors or boosters.34 In comparison, Mumbai has 22 stations, of which there are only four daughter stations, all of which are equipped with boosters (see table 13: Action stations).55

The biggest compressors, which are installed in mother stations, have a flow rate of 1,100 kg/hour. For online stations, a smaller compressor is used which can fill 250 kg/hour. Both these compress the gas up to 250 bar pressure and can serve two dispensers at one time, that is, they can help to fill up four vehicles at one time (one dispenser is used to fill two vehicles).56 Therefore, lack of adequate number of compressors in a dispensing station can result in the dispensers becoming non-functional. For instance, at the dispensing station near CGO complex, in spite of there being five dispensers, all of them cannot be operated simultaneously as there is only one compressor. IGL is in the process of installing a second compressor in that station.57

There is another type of compressor called booster, which is used only in daughter stations. The booster is used to increase the pressure of the gas when the pressure in a cascade drops to about 180 bar from the required filling pressure of 200-220 bar while dispensing gas. In absence of a booster, it is not possible to dispense gas once the pressure level falls to 180 bar, and then the cascade has to be changed.58 Cascades full of CNG under adequate pressure are brought to a daughter station after being filled at a mother station. A mother station is connected to the pipeline.

A study on filling time of three-wheelers done by IGL in daughter stations without boosters in Delhi showed that when the filling pressure is 200 bar, it can fill the cylinder of a three-wheeler to its full capacity, that is, 3.5 kg in 90 seconds. But when the pressure drops to 180 bar in the cascade, it can fill up to only 3.15 kg. It takes 67 seconds to do so. At a pressure of 165 bar, the cylinder can be filled up to 2.89 kg only in 48 seconds, and at 150 bar only 2.63 kg can be filled up and it takes 29 seconds to do so. At this pressure, it is not possible to fill the cylinder any more and the cascade needs to be changed and replaced with a new one.59 In other words, once the pressure drops in the cascade of a daughter station, very little gas gets filled up in the vehicle’s cylinder. This means that a commercial vehicle which runs all the day has to keep coming back to a refilling station.


Number of cascades in a dispensing unit

This points out to another problem in the dispensing of CNG in Delhi, that is, inadequate number of cascades in a daughter station. If there are an inadequate number of cascades, then the dispensing station will have to be closed till more cascades are obtained. While the daughter stations in Mumbai have 3-6 cascades on average, in Delhi, there are less than three cascades for each daughter station. There are 47 daughter stations in Delhi and about 120-125 cascades. At a given point of time one cascade is used, one is getting filled up at the mother station and one is in transit. Not surprisingly daughter stations often have no gas to dispense in Delhi.60


Distribution of dispensing stations

Besides the problems with the dispensing stations, the distribution of dispensing stations is also a problem. There are 31 stations in south Delhi in comparison to 12 in north Delhi and 11 in central Delhi. East and west Delhi have only nine stations each. While all the mother and online stations are restricted to north and south Delhi, east Delhi has only daughter stations and that too without boosters. All the nine stations in west Delhi are daughter stations but only two with a booster.61 This means that IGL must move fast to extend the pipeline to east and west Delhi (see table 14: Weak links).

According to MOPNG, though there are 74 CNG stations in Delhi but only 16 online stations are catering to 75 per cent of the demand and that is resulting in long queues.44 If this is true, it is obvious that this is happening because better pressure is maintained at the online stations.62

Gas allocation

MOPNG argues that production and supply of natural gas from the ONGC wells are declining on account of the fact that these wells are more than 15 years old. In this scenario, increasing the allocation of more CNG to Delhi would mean decreasing the allocation of natural gas to industries, power stations and fertiliser units which are being fed from the existing gas pipeline. “This would have a serious impact on the economy of the country” says the ministry.68 But the ministry is not concerned about improving public health.

                      

The ministry, therefore, does not want autos, taxis and cars to get converted to CNG. Instead it wants them to continue to run on the petrol (unleaded petrol with 1 per cent benzene) and diesel (with 500 ppm sulphur content) which are now available in Delhi. The ministry is only prepared to assure gas supply for 12,000 buses. But this is only the current busload in the city. The city is scheduled to grow from its current population of 14 million to more than 22 million in 2021.69 How will the gas needs of the future bus requirements be met? It is obvious that the current allocation strategy has to change to take into account public health.

The key issue here is prioritising allocation of natural gas. There is much scope of allocating more natural gas to Delhi but MOPNG is not willing to do that. Instead it is trying to raise the bogey of gas shortage.

Even as the transport sector is being starved of gas, piped gas is being supplied to hotels and affluent households. It was first supplied to Kaka Nagar, Bapa Nagar and Pandara Park in 1997 as a pilot project. Since then it has been extended to Golf Links, Sunder Nagar and Sujan Singh Park. More recently, gas supply has started in Nizamuddin (east and west), New Friends Colony, Friends Colony, Maharani Bagh, Kalindi Colony, Sukhdev Vihar, Sukhdev Vihar Pocket A & B, Ishwar Nagar and Zakir Bagh. In addition, five-star hotels The Hyatt Regency, Hotel Taj Mahal, Hotel Oberoi, Hotel Ambassador and Hotel Surya have switched over to natural gas for commercial application like cooking, water heating, air conditioning, space heating, and power generation.70

All these areas are high income areas which were earlier using LPG. Switching from LPG to CNG will have almost no impact on pollution reduction. In any case, there is no shortage of gas, it is a question of allocating enough gas to meet the vehicular demand of Delhi.

Gas allocations are made by MOPNG on the recommendations of the Gas Linkage Committee (GLC), which is an inter-ministerial committee with representatives from the planning commission, and the Union ministries of finance, power, chemicals and fertilisers and steel. The allocations are made based on the requests received, taking into consideration the existing allocations and the gas availability projections in different regions from time to time.

In view of the importance of the fertiliser and power sectors in the national economy, preference in allocations has been given to these sectors. As and when shortage of gas is perceived in any region, an action plan for the region is drawn up and approved by the GLC wherein fertiliser and the power sectors are given priority. The departments of fertiliser and power are consulted in this regard and the GLC, while approving the action plan considers the bulk allocation for each of these sectors while leaving the individual requirements of each unit to these departments within the overall allocation for the sector. All gas-based units are required to have dual fuel capability so as to use other fuels whenever availability of gas is restricted.
The Planning Commission has set up a working group on petroleum and natural gas for the Tenth Plan under the chairmanship of the secretary, MOPNG. The working group has set up various subgroups including a subgroup on demand of petroleum products and a subgroup on natural gas production, availability and utilisation. The working group coordinates the functioning of the various subgroups. This practice was also followed for the Ninth Plan.

At present the gas allocation for consumers in Delhi is 3.07 MMSCMD (24.76 lakh kg per day) — 2.59 for power and 0.48 for other consumers. Out of 0.48 MMSCMD (3.87 lakh kg per day) only 0.15 has been allocated for transport and the remaining 0.33 MMSCMD (2.66 lakh kg per day) for households. Though there is a proposal from IGL requesting GLC to allocate an additional 1 MMSCMD (8.06 lakh kg per day) of gas to Delhi, MOPNG has shown no intent to approve the proposal.

IGL claims that the all their CNG stations are over-utilised and are working at more than 100 per cent of their capacity. Gas dispensation capacity is estimated on the basis of the 18 hours of operation per day. But as of now they are operating their stations for almost 24 hours. But even with this kind of utilisation, IGL is not able to meet the demand for transport in July 2001. IGL’s dispensing capacity in July, 2001, is 0.27 MMSCMD (2.22 lakh kg per day).

According to IGL, out of an allocation of 0.48 MMSCMD (3.87 lakh kg per day) only 0.15 (1.21 lakh kg per day) MMSCMD has been allocated to the transport sector. This means that IGL is already diverting 0.12 MMSCMD (0.96 lakh kg per day) from the allocated gas to the domestic sector. IGL can play around with supply as long as it is within 0.48 MMSCMD (3.87 lakh kg per day), according to its new managing director, A K Dey . Going by IGL’s estimates, in September 2001, the total demand by the transport sector will be 0.52 MMSCMD (4.2 lakh per day) and dispensing capacity will remain around 0.54 MMSCMD (4.4 lakh kg per day). Both overshoot the total allocation of 0.48 MMSCMD. Therefore, at least 0.06 MMSCMD (0.48 lakh kg per day) will have to be allocated from other sectors for Delhi by September 2001.

According to MOPNG, Delhi will need a maximum of 2 MMSCMD of CNG (16.13 lakh kg per day) in June 2002. This means a further allocation of 1.52 MMSCMD of natural gas to the city is required. According to IGL’s corrected estimates Delhi’s transport will need only about 1.4 MMSCMD (11.33 lakh kg per day) by March 2002. This is just 4.1 per cent of the capacity of the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline with a capacity of 33.4 MMSCMD (269.4 lakh kg per day). Even MOPNG’s inflated estimate amounts to just 4.6 per cent of the capacity of HBJ pipeline. Thus there is no reason why this demand cannot be met.


Intervention by the Supreme Court to increase gas allocation

The Supreme Court has in the past intervened in the allocation of gas. The allocation of gas for Mathura Refinery was made as per the directives of the Supreme Court to supply clean fuel, that is, natural gas, to all polluting industries in the Taj Trapezium Zone in order to save the ecology and environment around the Taj Mahal. The polluting industries included the Mathura Refinery and accordingly gas allocation of 1.4 MMSCMD (11.29 lakh kg per day) was made by the GLC to the Mathura Refinery. The pipeline was laid and supply commenced in 1996.

There are precedents to show that gas allocation have been augmented to meet higher demand from other sectors as well. Here are some instances:

    In September 2000, allocation to Essar Oil Ltd was increased by 0.7 MMSCMD (5.65 lakh kg per day) from 1.71 to 2.41 MMSCMD. that is, an increase of 5.64 lakh kg per day. Similarly, Reliance Refineries Limited got an increased allocation of 0.4 MMSCMD (3.22 lakh kg per day) raising it from 0.49 to 0.89 MMSCMD.

    In 1999, a new allocation of 0.85 MMSCMD (6.8 lakh kg per day)was made to Indian Petrochemicals Corporation Limited (IPCL), Dahej.

    In July 1999, National Thermal Power Corporation (NTPC), Kawas was allocated 2.1 MMSCMD (16.94 lakh kg per day). NTPC was further allowed NTPC to divert 1.5 MMSCMD(12.09 lakh kg per day) of the allocated gas to their plant at Jhannore in 2001.

    Allocation of 1.75 MMSCMD (14.11 lakh kg per day) of gas was shifted from the proposed power plant at Bawana that did not come up, to the proposed Pragati power plant of DVB in 2001. But Pragati power plant is yet to see the light of the day.

    Around 0.4 MMSCMD (3.22 lakh kg per day) of gas was allocated to Gujarat Industries Power Corporation Limited (GIPCO), Vadodara, by GAIL without any firm allocation.

    Gujarat State Fertiliser Corporation (GSFC), Vadodara, was supplied 0.8 MMSCMD (6.45 lakh kg per day) of gas to by GAIL against an allocation of only 0.4 MMSCMD (3.22 lakh kg per day) by GLC.

    DVB was given was given 1.2 MMSCMD (9.68 lakh kg per day) of additional gas by GAIL against an allocation of 0.84 MMSCMD (6.77 lakh kg per day) by GLC.

    GAIL supplied around 1.46 MMSCMD (11.77 lakh kg per day) to different consumers against an allocation of 0.48 MMSCMD (3.87 lakh kg per day) by sanctioned by GLC.

    The central minister of state for petroleum has written a note to GAIL asking it to work for city gas distribution in the city of Lucknow (the prime minister’s constituency) and Bareilly (constituency of minister of state for petroleum). On the basis of this MOPNG has approved a total allocation of 0.15 MMSCMD (1.20 lakh kg per day), of which allocation for Lucknow is 0.1 MMSCMD (0.80 lakh kg per day) and 0.05 MMSCMD (0.40 lakh kg per day) for Bareilly.

All this extra allocation has been done after the Supreme Court orders of July 28, 1998.

How can gas dry up if there are major expansion plans for gas supply in the future?

The expanded infrastructure being planned for delivery of regasified LNG to northern India is the expansion of the HBJ pipeline network from a capacity of 33.4 MMSCMD (269.35 lakh kg per day) to over 60 MMSCMD (483.87 lakh kg per day). The first phase envisages 800 km pipeline network linking Dahej LNG terminal with the HBJ system at Vemar in Gujarat and a parallel 42 inch pipeline to the existing HBJ pipeline from Vemar upto Vijaipur to transport 30 MMSCMD (241.94 lakh kg per day) of additional gas to the states of northern India. The investment in the first phase would be approximately Rs. 2,968 crore. The second phase envisages additional compression facility and expansion of the existing HBJ pipeline to Delhi and beyond to Haryana and Punjab to meet the requirements of natural gas in these states. The details of investment plans in the second phase are being worked out. How can gas become scarce with such massive projects in advanced stages of planning?