India City Gas Distribution (CGD) Market Set to Thrive at 11.7% CAGR

Published | 14 September 2022

India City Gas Distribution (CGD) Market is expanding at a double-digit growth rate owing to the government’s increasing focus to transform the economy as natural gas driven and an increasing demand for natural gas by major industry verticals.    

BlueWeave Consulting, a leading strategic consulting and market research firm, in its recent study, forecasts the size of India City Gas Distribution (CGD) Market to grow at a robust double-digit CAGR of 11.7% between 2022 and 2028, as India has a great potential for gas consumption and is expected to rank among the world's top users of natural gas. Although the goal of a 15% gas participation in the energy mix continues to be a primary aim, the Covid-19 has sped up the switch from oil and coal to gas and renewable energy. In the following years, CGD is expected to be among the industries with the highest growth rates. Natural gas is becoming more recognized as a cleaner and greener fuel. The fundamentals of the gas distribution system, the infrastructure network that must be set up, the business aspects involved in the actual distribution of natural gas as piped natural gas, and the safety requirements with regard to pipeline technology and implemented environmental regulations have all been identified by researchers.

India City Gas Distribution Market - Technology Advancements

The establishment of city gas distribution networks in India cities for which it obtained licenses in the 11th round of bidding will cost INR 10,000 crore over the course of the following five years, according to Bharat Petroleum Corporation Ltd (BPCL). Indian Oil Corporation Limited (IOCL), a state-run business, recently announced plans to invest INR 70,000 million in new city gas distribution (CGD) projects. The business also disclosed that IOCL secured roughly 33% of the demand potential in the 11th bidding round. There were 59 lakh domestic PNG connections, 29,000 commercial connections, and 10,000 industrial connections in January 2020. With over 22 lakh home connections, 19 thousand business connections, and 5,000 industrial connections, Gujarat has the most gas connections overall. The government also intends to create jobs by converting to a gas-based economy, because natural gas is an affordable and environmentally friendly fuel.

The new and revised laws assisted in increasing public and private sector participation in the CGD market, resulting in the expansion of the CGD network to 228 GAs covering a total of 70.86 % of the nation's population and 52.80 % of its territory. India's city gas distribution market can be divided into categories depending on type, supply source, end-use industry, and geography. Due to strict environmental laws and the fast expanding penetration of CNG-equipped cars in India, CNG sales represent the lion's share of CGD sales in India.

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India City Gas Distribution Market - Rising Demand

To evaluate the demand situation in the targeted locations that we polled for, the demand requirements for natural gas in various groups, including industries, household consumers, commercial customers, and transportation authorities, were surveyed. Ratnagiri District (Maharashtra State), North Goa District (North Goa State), and Dhar District (Madhya Pradesh State) have been designated as the three "Targeted Areas" that have the potential for CGD network creation. Due to rising natural gas demand from the automotive, industrial, commercial, and residential end user categories, the market is expected to grow. A growing number of firms are being allowed and awarded licenses to operate in the CGD industry in various locations across the country in Rounds 9 and 10, thanks to the Government of India's expanding number of supportive efforts in the CGD sector. For instance, in the ninth and tenth rounds of city gas distribution, Indian Oil Corporation and Adani Gas Limited, respectively, received the most permits for the distribution of gas in 17 and 15 geographic areas. The government also intends to create jobs by converting to a gas-based economy because natural gas is an affordable and environmentally friendly fuel. The new and revised laws assisted in increasing public and private sector participation in the CGD market. The market is expected to be driven by rising CNG stations and PNG connections. Upon completion of the 11th bidding round, it is expected that nearly 96% of India's population will have access to natural gas uses.

Segmental Coverage

India's city gas distribution market can be divided into categories depending on type, supply source, end-use industry, and geography. Due to strict environmental laws and the fast expanding penetration of CNG-equipped cars in India, the CNG segment led CGD sales in India. The country's CGD network is expected to witness significant expansion throughout the projection period, supported by healthy PNG and CNG segments.

Impact of COVID-19 on India City Gas Distribution Market

India City Gas Distribution Market suffered from the COVID-19 pandemic's outbreak in Q1 of 2020. A decrease in demand, which had an impact on the market, was brought on by lockdown limitations the Indian government implemented to stop the spread of COVID-19 infections across the nation. For instance, according to estimates from the investment firm ICRA Ltd, domestic gas volumes in the city gas distribution sector fell by 12% month over month to 15.2 million metric standard cubic meters per day (MMSCMD) in April 2020, with the passenger and transportation end-user segments suffering the most as a result of lockdowns.

Competitive Landscape

India's city gas distribution (CGD) market is not very fragmented. Major players in the market include Indraprastha Gas Limited, Mahanagar Gas, GAIL Gas Limited, Gujarat Gas Ltd, Indian Oil-Adani Gas Pvt. Ltd, Maharashtra Natural Gas Limited, Bhagyanagar Gas limited, Tripura Natural gas Company Limited, and Green Gas Limited.

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