India’s largest oil company Indian Oil Corporation (IOC) is planning to invest about Rs.20,000 crore in city gas distribution projects over the next three to five years. The company believes gas to be the thing of the future, and it would soon complement the income from its oil business. The company also noted that it aims to generate nearly 15% of its revenues from gas business in the next five years.
IOC expects Compressed Natural Gas (CNG) to replace the traditional fuels, petrol and diesel, used in some vehicles in the near future. Also, piped gas lines are expected to replace LPG in the near future. IOC is entering this business to maintain its market leadership in the upcoming years.
Among the public sector oil companies, IOC has been aggressively bidding on city gas distribution licenses in various geographical areas. The company’s Chairman Sanjiv Singh stated that IOC has bid for licenses in 57 geographical areas out of the total 86. It expects to win nearly 20 of these bids. Investments in these 20 geographical areas will be made to the tune of Rs.20,000 crore over the next three to five years.
IOC is also hoping to win licenses for the retail sale of CNG and piped gas distribution in about 20 cities in India. IOC’s investments will also include the money spent on the installation of CNG distribution stations and pipelines for households and commercial establishments.
IOC currently holds about 44% of India’s fuel business and owns about one-third of the country’s oil refining capacity. The company expects natural gas to play a major role in India’s fuel requirements in the near future. Also, environmental considerations favour natural gas as it is much cleaner than traditional fuels like petrol and diesel.
The oil ministry is currently planning to invest about $100 billion in natural gas projects by the year 2022. State-owned oil companies will take care of a large chunk of these investment requirements. A large portion of these investments will be utilized for setting up gas grids in 228 cities across the country.