INTERNSHIP PRESENTATION

ON

MARKET SURVEY RESEARCH AND

DEMAND ASSESSMENT FOR SETTING
UP OF CGD BUSINESS
MENTOR NAME- SUBMITTED BY-
SAURABH JAIN ACHIN (M1702)
ABOUT FEEDBACK INFRA

 Feedback Infra is India's leading infrastructure services company, with over 9,500 employees and associates. It has executed projects across 28
Indian states and 37 countries across Africa, Middle-East and Asia. Feedback Infra works across transportation, energy and urban infrastructure and
provides consulting services for new and existing projects, manages their design and construction and operates and maintains infrastructure assets.
It serves clients across the Union and State governments, private developers as well as banks and financial institutions. Feedback Infra, while
privately held, is backed by its three shareholders � ADV Partners, IDFC Bank Ltd and HDFC Ltd.

 Feedback Infra’s subsidiaries are:

• Feedback Highways OMT Pvt Ltd, which is India's largest highway tolling, operations and maintenance company.
• Feedback Power Operations & Maintenance Services Pvt Ltd which provides O&M to power plants in India and abroad.
• Feedback Energy Distribution Company Ltd, which distributes electricity to more than half a million customers across Odisha and has achieved
India’s steepest reduction in AT&C losses in the last four years, while working in predominantly rural areas.
INTRODUCTION

 India is a new entrant in the natural gas market in comparison to the mature gas-based economies of USA, UK, Korea and Japan
amongst others. The share of natural gas in the energy basket of India stands at 10 percent in FY10 in comparison to the global average
of 25 percent.

 In particular, the city gas distribution (CGD) sector offers a way to improve the availability of natural gas to the industrial, domestic
and commercial segments of a region. The CGD sector which is slowly but steadily evolving at a CAGR of eight percent will play a
remarkable role in the growth of India’s economy.

 In terms of cost benefits, CGD remains an attractive option for fuel switching from existing fuels to PNG/CNG, offering great ease of
use and savings for an end-user. A CGD business is capital intensive in nature. Financing plays a crucial role in CGD projects which
generally have a debt- equity ratio of 2:1. Primary factors influencing financing of a CGD project are its cost structure, ownership
structure and focus areas (PNG/CNG). CGD project costs depend on the extent of the geographical area (GA), demand composition
and penetration in terms of domestic connections.

 Operational and financial risk assessment is integral to and crucial for success in the CGD business. With CGD segment becoming an
integral part of the economic development of India, many players are moving towards commercializing this underlying market
potential.
INDIA'S STANDING IN THE GLOBAL GAS MARKET
 A VIEW OF PNGRB BIDDING ROUNDS

• City Gas Distribution (CGD) networks in India are operational in around 40 cities and under construction in around 35 cities [6]. While
prior to the formation of Petroleum and Natural Gas Regulatory Board (PNGRB), the operators were approved by either the Central
Government or State Government, since 2008 the operators are selected based on bidding. Till now, 8 rounds of bidding have happened
with results announced for the first 6 rounds, wherein operators for 47 cities have been finalized and some of which are already
operational.
• A brief look on Cities accomplished-

1.KOTA (RAJASTHAN) 1.GHAZIABAD(U.P.) 1.ASANSOL- 1.ERNAKULAM DISTRICT (KERLA) 1.EAST GODAVARI (ANDHRA
BID 1

BID 2

BID 3

BID 4

BID 5
2.RANGAREDDY & MEDAK PRADESH)
2.SONIPAT (HARYANA) 2.ALLAHABAD(U.P.) DURGAPUR(WB) DISTRICTS (AP) 2.BELGAUM(KARNATAKA)
2.LUDHIANA(PUNJAB) 3.NALGONDA DISTRICT (AP) 3.AHMADNAGAR(MAHARASHTRA)
3.MATHURA (UTTAR 3.JHANSI(U.P.) 4.KHAMMAM DISTRICT (AP) 4.KRISHNA(ANDHRA PRADESH)
PRADESH) 3.JALANDHAR(PUNJAB) 5.ALIBAG/PEN (MAHARASHTRA) 5.MUZAFFARNAGAR(UTTAR
4.RAJAHMUNDRY(A.
4.KAKINADA (ANDHRA 6.LONAVLA/KHOPOLI PRADESH)
P.) 4.PANIPAT(HARYANA)
(MAHARASHTRA) 6.WEST GODAWARI(ANDHRA
PRADESH) PRADESH)
5.YANAM (U.T.of 5.JAMNAGAR(GUJRAT) 7.GUNA (MP)
5.MEERUT (UTTAR PONDICHERRY) 8.SHAHJAHANPUR (UP) 7.BADAUN(UTTAR PRADESH)
6.BHAVNAGAR(GUJRAT) 8.ALIGARH (UTTAR PRADESH)
PRADESH) 9.BENGALURU RURAL AND URBAN
6.SHAHDOL(M.P.) 7.KUTCH-EAST(GUJRAT) DISTRICTS(KARNATKA) 9.BULANDSHAHR(UTTAR PRADESH)
DEWAS (MADHYA 10.RAIGARH 10.BANASKANTHA(GUJARAT)
PRADESH) CHANDIGARH(Union KUTCH-WEST(GUJRAT) DISTRICT(MAHARASHTRA), 11.TUMKUR(KARNATAKA)
Territory) EXCLUDING AREAS ALREADY
AUTHORIZED 12.LATUR(MAHARASHTRA)
11.PUNE DISTRICT(MAHARASHTRA), 13.DHAR(MADHYA PRADESH)
EXCLUDING AREAS ALREADY 14.DAHOD(GUJARAT)
AUTHORIZED
15.HARIDWAR(UTTARAKHAND)
THANE DISTRICT(MAHARASHTRA),
EXCLUDING AREAS ALREADY 16.DHARWAD(KARNATAKA)
AUTHORIZED 17.SHIVPURI(MADHYA PRADESH)
UT OF DAMAN 18.BIDAR(KARNATAKA)
13.UT OF DADAR & NAGAR HAVELI 19.OSMANABAD(MAHARASHTRA)
14.PANIPAT DISTRICT(HARYANA) 20.UDHAM SINGH
AMRITSAR DISTRICT(PUNJAB) NAGAR(UTTARAKHAND)
 1.DHAR(MADHYA PRADESH) 1.JAIPUR(RAJASTHAN) 1.KARNAL(HARYANA)

BID 8
BID 6

BID 7
2.DAHOD(GUJARAT) 2.SOLAPUR(MAHARASHTRA) 2.AMBALA &
3.AHMADNAGAR(MAHARASHTR 3.DAVANAGARI(KARNATAKA) KURUKSHETRA(HARYANA)
A) 4.UDAIPUR(RAJASTHAN) 3.SOUTH GOA(GOA)
4.BANASKANTHA(GUJARAT) 5.BHOPAL (MADHYA PRADESH) 4.YANAM(PUDUCHERRY)
5.SAHARANPUR(UTTAR 5.BULANDSHAHR (UTTAR
PRADESH) PRADESH)
6.RAEBARELI(UTTAR PRADESH) 6.BAGPAT (UTTTAR PRADESH)
7.MAINPURI(UTTAR PRADESH) 7.KOLHAPUR(MAHARASHTRA)
8.RAMABAI NAGAR (UTTAR
PRADESH)
9.CHITRADURGA(KARNATAKA)
10.BHIWANI(HARYANA)
11.RATNAGIRI(MAHARASHTRA)
12.AMRELI(GUJARAT)
13.BHATINDA(PUNJAB)
14.AURAIYA(UTTAR PRADESH)
15.PATAN(GUJARAT)
16.BAGHPAT(UTTAR PRADESH)
17.ETAWAH(UTTAR PRADESH)
18.YAMUNANAGAR(HARYANA)
19.SHAHDOL(MADHYA
PRADESH)
20.GADAG(KARNATAKA)
JHABUA(MADHYA PRADESH)

BID 9- Bidding of the biggest city gas distribution licensing round opened in india, on tuesday, offering 86 permits for selling cng and
piped cooking gas in 174 districts in 22 states and union territories. as many as 86 geographical areas (gas), made by clubbing adjacent
districts, are on offer in the 9th city gas distribution (cgd) bidding round, according to oil regulator PETROLEUM AND NATURAL GAS
REGULATORY BOARD (PNGRB).
METHODOLOGY OF PROJECT

 Primary Phase:- In this phase Petroleum and Natural Gas Regulatory Board releases notice for establishment City Gas Distribution
network in some Geographical Areas. In order to lay the network open bidding process is conducted in which companies participate
with their bids. Now in order to get down to a decision to invest or not for a GA, companies hire consultant firms as depicted through a
brief flow chart below.

PNGRB BIDDING PROCESS

COMPANY COMPANY COMPANY

1 2 3

CONSULTANCY
(for feasibility study)

 Secondary Phase :- To arrive at a decision for bidding company, consultants conduct Feasibility study. Flow charts drawn below guide
you through the process flow after a project arrives, suppose Company 2 gives the project to a Consultant firm to conduct the
feasibility study for City Gas Distribution Network of a GA. Then first and foremost step taken by the firm will be of Demand
Estimation.
 There are basically two types of demand, one is potential which is calibrated for a universe present on the field while other is realistic
which is a part of potential that can actually get converted into final output for the project. Potential demand is evaluated through
primary and secondary research in four segments of market namely Industrial, Commercial, Domestic and Transport, their fuel
consumption pattern is analyzed and thereby cumulative data is extrapolated for potential demand for that GA, then Realizable demand
depends upon the penetration rates of the sector.
 PRIMARY RESEARCH

SECONDARY RESEARCH

Technical Feasibility, CAPEX, OPEX, IRR and NPV

Call for which city to be bidden

• Tertiary Phase :- Method of Demand Assessment include : - Sectors which are taken into consideration for Demand Assessment: -
PRACTICAL STUDY FOR A GEOGRAPHICAL AREA
 Step 1:- It is extremely necessary to have a rough framework and a planned design before conducting demand assessment on field. So,
at first secondary research is carried out through the data collection from all the sectors through telephonic calling as well as published
information. This step helps in focusing the specific potential customers on ground which also act as a sample for primary research.
Such potential customers are clustered and represented sector wise so that it would be easy to draw a visit plan for primary research.
Some of such drafts on the map are shown below :-
 Step 2:- After identifying the sample users, their demand is evaluated through primary research in which one on one data collection of
demand is done on field. And based on their demand, raw data collected on field for fuel usage is then converted to equivalent values
of natural gas consumption in SCMD units. Conversion can be done through multiplication factors for different fuels as shown below
in table 2. While demand model for 4 sectors is attached in Annexure 1: -
CONVERSION
FUEL NAMES GCV NCV CHANCE NCV IN SCM MUTIPLICATION FATOR
FO (KCAL/L) 10500 9520 100% 6690.091356 0.787069571
LDO (KCAL/L) 10700 10000 100% 7027.406887 0.826753751
LPG (KCAL/KG) 11950 11000 100% 7730.147576 0.909429127
HSD (KCAL/L) 10800 8700 100% 6113.843992 0.719275764
HSD(DIESEL SET)
(KCAL/L) 10800 8700 0% 6113.843992 0.719275764
NAPTHA (KCAL/TON) 10757 10000 100% 7.027406887 0.000826754
CHARCOAL (KCAL/TON) 4500 4500 0% 3.162333099 0.000372039
WOOD (KCAL/TON) 3500 3500 0% 2.45959241 0.000289364
HUSK (KCAL/TON) 3000 3000 0% 2.108222066 0.000248026
BAGASSE (KCAL/TON) 4400 4400 0% 3.09205903 0.000363772
NATURAL GAS
(KCAL/SCM) 9500 8500 0% 8500
Conversion table into equivalent values of Natural Gas in SCM

 Step 3:- Now based on demand model, financial model is created for evaluating the CAPEX and OPEX required for planting
establishments to deliver the Natural Gas to that Geographical Area. A roughly drafted Financial Model is attached in Annexure 2.
CHALLENGES IN LAYING CGD
• Liquid fuel replacement: To address pollution in cities, a multi-pronged approach is needed wherein we incentivize natural gas usage
for mobility, heating and lighting requirements in and around city areas. We have to build up a world-class digitally connected public
transport system with last mile connectivity running on natural gas. Usage of personal vehicles during peak hours on weekdays should
be heavily dis-incentivized to encourage people to use public transport [8].
•
• CGD infrastructure: Another issue arises with the infrastructure of CGD. One ready-made solution is to use those petrol stations that
are located in and around cities. Retrofitting CNG/LNG in petrol stations is possible in a space efficient modular set up. This would
provide additional fuel choices to consumers and a revenue stream to retailers.
•
• Pipeline infrastructure: While India needs 30000 kms of pipeline, we only have 15000 kms today, and those too are underutilized at
less than 40% capacity [8]. There are two solutions: one based on economics and the other on technology. Viability Gap Funding
(VGF) on the lines of National Highway Authority of India (NHAI) provides a good solution to de-risk the investors from capacity
utilization risks and paves the way for a speedy building-up of infrastructure. The second solution is technology based and is popularly
known as ‘LNG at door step or distributed LNG’, which doesn’t need pipelines (regasification terminal is optional). LNG is
transported in modular sized cryogenic ships and then directly off-loaded into tank trucks that carry it on road right up to the customers
who are provided with third-party owned in-situ LNG storage facilities. This can serve as an intermediate solution and support market
development that would complement pipeline utilization as well as extend the reach of natural gas to cities that are not connected by
pipelines.
• Bidding process: Bidding parameters should be focused on rewarding quantum and speed of committed CGD infrastructure and less
on the economics. The policy initiatives of the Petroleum and Natural Gas Regulatory Board, India such as focusing on Technical &
Financial Capability, rationalization of Geographical Area (GA), extension of exclusivity period, access to third party and connectivity
are a step in the right direction. The bidding criteria should focus on a work program with incentives to complete on or before time.
There should also be a performance bond to act as deterrence for any deliberate delays.
CONCLUSION

 Policy makers and all the players in the energy sector, NGOs and civil society need to come together and give CGD the right impetus
to provide clean energy on an urgent basis. Formulating the vision of a gas- based economy is just the start. The key is to ensure that
legislation, policy, regulations and taxation levers are used in a concerted effort to align with the stated vision. It is no longer a matter
of options – clean energy has now become an imperative and CGD is a proven, feasible and, most importantly, implementable solution.
REFERENCES

• https://www.fractracker.org/resources/oil-and-gas-101/pipeline-construction/
• https://www.ey.com/Publication/vwLUAssets/Exploring_opportunities_-
Growth_potential_in_the_Indian_natural_gas_market/
• Ernst & Young analysis from BP Statistical Review of World Energy 2010 and US Bureau of the Census
• Ernst & Young analysis
• https://energy.economictimes.indiatimes.com/energy-speak/cgd-bidding-criteria-time-india- moved-to-a-
new-model/2735
• https://www.financialexpress.com/industry/india-opens-biggest-city-gas-licensing- round/1159970/
• https://www.bp.com/en_in/india/point-of-
view/CGD_A_%20cleaner_sustainable_solution_for_India.html
• http://www.infraline.com/cgd_report.pdf
• http://www.pngrb.gov.in/CGD-network-BID.html
• https://www.ey.com/in/en/newsroom/news-releases/pe-ey-urgent-need-for-gst-on-natural- gas
• http://cngeurope.com/fuel-calorific-values/
APPENDIX
THANK YOU!!!!