ET NowIn a chat with ET Now, Rajeev Mathur, MD, Mahanagar Gas, said that the company would see a healthy volume growth in the range of 7-8% for the rest of the year if the oil prices remain steady. He said that Mahanagar Gas can grow at three times the current rate in Mumbai alone.
ET Now: Can you give us an indication of the volume growth for the company?
Rajeev Mathur: We had said before that on an average we will be doing about 7% to 8%. I am happy to say that we have done volume growth of about 7.5% as compared to the corresponding quarter in the last year.
ET Now: How do you see the crude movement from here and at what price will it be optimum for you?
Rajeev Mathur: As things stand today, we see a volume growth of on an average between 7% to 8% over the balance period of the year subject to the oil prices remaining where they are and the gas prices being favourable to us. If the differential between the CNG price and the alternate product, which is diesel or petrol, remains as they are, we should be able to do about 7% to 8%.
ET Now: What is the current penetration and what is the scope for expansion?
Rajeev Mathur: As far as the piped natural gas to houses is concerned, we have done about 8.82 lakh households by now. During this year, we plan to do about a lakh or lakh and twenty-five thousand houses during the financial year 2016-17. There are about 30 lakh houses in Mumbai, so there are at least 20 lakh more houses which need to be connected.
ET Now: Right now you are present in Mumbai and also in parts of the Raigarh District. What are the expansion plans because you are dependent on one city?
Rajeev Mathur: We have enough potential to do about three times of what we have already done in the past within Mumbai. There is growing potential in Raigarh where a new smart city, airport, and townships are coming. That is going to give us a lot of business opportunity in terms of PNG as well as CNG. In addition, we are closely looking at the bidding rounds of PNGRB for different cities and trying to get at least one of them going forward.
ET Now: The company sources domestic natural gas currently at about $3.4 to $5.7 per MMBtu which is definitely lower than imported natural gas. So how are you going to secure gas at lower cost in the future?
Rajeev Mathur: The prices of PNG and CNG we source are driven by a government formula. This comes in for a review every six months, and in the month of October, we shall have a new pricing regime. We would look at passing the benefits on to the customer, that is for 85% of the gas we get. For the balance 15% that goes to the commercial and industrial sectors, we buy from the open market. There are about seven or eight suppliers depending on how the prices behave in international markets. Currently, prices are looking down, and we should be in a position to procure gas at more competitive prices going forward. That should enable us to penetrate the commercial and industrial sectors more and probably will add on to the spreads that we have in these sectors today.
ET Now: How dependent is the company on government policies and regulations or would you be able to chart your own growth course independent of that?
Rajeev Mathur: The government policies have a big impact on CNG and PNG. With the government giving top priority to PNG and CNG sectors, in terms of domestic gas allocation and availability, it makes quite attractive for us to penetrate and give more and more connections to people within cities. As long as this policy remains, we shall be able to provide this service PNG to as many customers as possible. We shall also be able to provide CNG which is a very clean fuel to more and more customers in Mumbai and adjoining areas.
ET Now: What are your capex plans?
Rajeev Mathur: On an average, our capex was around Rs 200 crores in the past. This year, since we have added Riagarh into our fold, we would be investing around Rs 250 crores.
ET Now: Can you give us an indication of the volume growth for the company?
Rajeev Mathur: We had said before that on an average we will be doing about 7% to 8%. I am happy to say that we have done volume growth of about 7.5% as compared to the corresponding quarter in the last year.
ET Now: How do you see the crude movement from here and at what price will it be optimum for you?
Rajeev Mathur: As things stand today, we see a volume growth of on an average between 7% to 8% over the balance period of the year subject to the oil prices remaining where they are and the gas prices being favourable to us. If the differential between the CNG price and the alternate product, which is diesel or petrol, remains as they are, we should be able to do about 7% to 8%.
ET Now: What is the current penetration and what is the scope for expansion?
Rajeev Mathur: As far as the piped natural gas to houses is concerned, we have done about 8.82 lakh households by now. During this year, we plan to do about a lakh or lakh and twenty-five thousand houses during the financial year 2016-17. There are about 30 lakh houses in Mumbai, so there are at least 20 lakh more houses which need to be connected.
ET Now: Right now you are present in Mumbai and also in parts of the Raigarh District. What are the expansion plans because you are dependent on one city?
Rajeev Mathur: We have enough potential to do about three times of what we have already done in the past within Mumbai. There is growing potential in Raigarh where a new smart city, airport, and townships are coming. That is going to give us a lot of business opportunity in terms of PNG as well as CNG. In addition, we are closely looking at the bidding rounds of PNGRB for different cities and trying to get at least one of them going forward.
ET Now: The company sources domestic natural gas currently at about $3.4 to $5.7 per MMBtu which is definitely lower than imported natural gas. So how are you going to secure gas at lower cost in the future?
Rajeev Mathur: The prices of PNG and CNG we source are driven by a government formula. This comes in for a review every six months, and in the month of October, we shall have a new pricing regime. We would look at passing the benefits on to the customer, that is for 85% of the gas we get. For the balance 15% that goes to the commercial and industrial sectors, we buy from the open market. There are about seven or eight suppliers depending on how the prices behave in international markets. Currently, prices are looking down, and we should be in a position to procure gas at more competitive prices going forward. That should enable us to penetrate the commercial and industrial sectors more and probably will add on to the spreads that we have in these sectors today.
ET Now: How dependent is the company on government policies and regulations or would you be able to chart your own growth course independent of that?
Rajeev Mathur: The government policies have a big impact on CNG and PNG. With the government giving top priority to PNG and CNG sectors, in terms of domestic gas allocation and availability, it makes quite attractive for us to penetrate and give more and more connections to people within cities. As long as this policy remains, we shall be able to provide this service PNG to as many customers as possible. We shall also be able to provide CNG which is a very clean fuel to more and more customers in Mumbai and adjoining areas.
ET Now: What are your capex plans?
Rajeev Mathur: On an average, our capex was around Rs 200 crores in the past. This year, since we have added Riagarh into our fold, we would be investing around Rs 250 crores.
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