with Shri. Arvind Kumar Mittal, Managing Director, Maharashtra Natural Gas Limited
MNGL is the today one of the main provider of Natural Gas to Maharashtra’s final consumers. You joined the company very recently: how was the state of the company when you arrived?
I have taken leadership of MNGL in the month of April 2011. After I took over, the total sales – comprising of both Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) – have been increased by about 35%, in this short span of four months.
MNGL is currently operating 14 CNG stations in the Pune area, of which one is an online station. We have also started supplying PNG to some of the big townships, not connected to our main steel grid, through Decompression unit with stationary cascade storage facility. This facility is the first of its kind in India.
What are the new goals that you have set for the company?
Today, MNGL’s total capital expenditure is around 100 crores. In addition, we are planning to invest 100 crores more this year and another 250 crores by end of 2014. This will bring MNGL’s total capex to around 450 crores in three years from now.
We are planning to add 140 kilometers of steel pipeline and 400 kilometers of MDPE pipeline to our existing infrastructure. Also, by end of 2014, we would have set up 43 CNG stations spread across the city.
Also, MNGL’s PNG domestic connections would increase to 72000 by 2014 from current figure of 3,000.
What is your assessment over MNGL’s capacity to raise funds and finance the company’s future development?
MNGL has already tied up with Banks for financing its capital expansion for the next 5 years. Seeing our future prospects, we see no issue in raising the funds.
MNGL focuses on both PNG and CNG distribution: what are the areas of priority today?
In the allocated Geographical Area of Pune, MNGL is developing fast in term of spreading its pipe line reach all around Pune city & adjoining areas to cater to PNG & CNG customers.
How difficult is it to change the mindset of local consumers to switch to natural gas and to what extent do you have to act as an educator?
In today’s world, consumers are very much familiar with fuel. Globally, people are starting to be aware of the importance of having greener fuel and of having an environmentally responsible way of living.
We are certainly going to contribute in reducing pollution in Pune.
There is also a cost factor: CNG is much more economical than petrol or diesel. In addition to the Auto-rickshaws, four-wheelers are also going for a CNG kit, nowadays.
The CNG market is a supply driven market considering how high the demand is. To what extent do you plan ahead the necessary infrastructure to meet the demand?
Looking at this cost advantage I mentioned, auto rickshaws are very much motivated to use natural gas. To cope with their requirements, we are going to add more stations in close proximity of the town centre, where high demand of CNG is being seen.
How challenging is it to conciliate your commitment to the country in providing safe and affordable gas accessible to all and being a market oriented player?
Considering the price for CNG is market driven, we are not seeing any particular difficulty in our pricing strategy.
Regarding PNG, we are also replacing liquid fuels by natural gas. In comparison to the liquid fuels, our approach to the market is different since we have been transparent with our customers. PNG is also more economical than liquid fuels, in addition to being more environmental friendly.
We deliver PNG safely to customer’s premises and follow T4S regulation by PNGRB.
MNGL is planning to expand into two more geographical areas – Khopoli-Lonavala and Pen-Alibag. Where are we today in this process?
We are going to bid for both Geographical Areas. In fact, 16th of September’11 would be last date of submission of bids. As we are fully equipped, and thanks to our geographical advantage, we are confident that we will be successful. The basic infrastructure work that we have set up in Pune will certainly facilitate implementation of infrastructure in these areas.
Competition could come also in Pune itself, as the exclusivity agreement awarded by the PNGRB to operate the network in Pune ends in 2014. To what extent are you anticipating this and preparing the company to react to the opening of the market?
By 2014, I am confident that MNGL will be a fully established City Gas Distribution (CGD) company in India. Our vision is to place MNGL amongst the top five CGD companies in the country in five years from now.
MNGL is already a competitive player. By expanding our network in Pune and surrounding areas, we will further increase our competitiveness and grow tremendously; the sky is the limit.
Only eight states have so far taken initiative for city gas distribution. The petroleum regulator (the PNGRB) has identified 200 cities in the first phase for supplying city gas and ultimately plans to pipe the whole country. This creates obviously great opportunities for city gas distributors such as MNGL. What are the implications of this plan for MNGL?
We expect our turnover to grow exponentially in the next three years, which will allow us to run the business in a competitive market. We will get opportunity to expand beyond our existing GA with the expansion of CGD sector in the country.
India is the world’s fourth largest consumer of energy after the USA, Japan and China and this trend is not about to change given the country has one of the world fastest economies. Maharashtra, with Pune being seen as the ‘engineering valley of India’ especially has a strong economic development. How do you evaluate future outlooks and how would you define MNGL’s role within the region and the country to ensure energy security?
India’s GDP is forecasted to grow by over 8% in the next few years. To sustain such growth, the country’s energy requirement is tremendous. The share of natural gas used in India on the energy scale is around 9%, as against world average of 24%. Therefore, use of natural gas is expected to grow in India at a faster rate than any other source of energy, if India has to achieve the projected GDP growth number.
As you know MNGL is operating in Pune area, the second biggest city in Maharashtra, we obviously have an important role to play in the region’s economic development. We are determined to replace the conventional fuel, causing the most pollution, by natural gas for most of the customers in our Pune area.
What is your final message to our international readers of OJFG on behalf of MNGL?
There is a huge growth potential for CGD business in India. To turn potential into reality, we need enabling regulations and indigenous gas allocation for this sector.
We are hoping to make Pune less polluted and hope to do so in many more cities in India.