NEW DELHI: The Compressed Natural Gas (CNG) sector has rapidly become a preferred fuelling option for a large fleet of service vehicles such as cabs and auto-rikshaws, and even some private vehicles, over the past few years. However, the segment’s recovery post the lockdown has been a long drawn out one, with industry sources stating that sales have currently recovered to around 85-90 per cent of pre-Covid levels. According to industry analysts, sector executives do not expect the market to normalise until the last quarter of the current financial year (Jan-Mar, 2021).
For instance, Indraprastha Gas saw April and May sales virtually wiped out due to the lockdown and relevant restrictions, but beginning June, things have begun to pick up. “Indraprastha’s CNG volumes are currently at 85-90 per cent of normal levels. However, the company expects volumes to normalize by the end of 4QFY21. Maharashtra Natural Gas Ltd (MNGL) and Central UP Gas Ltd (CUGL) have seen volume impact at levels similar to IGL. CUGL (Kanpur) has seen better recovery, while MNGL (Pune) has been drastically impacted due to extended lockdown,” said analysts at Motilal Oswal Institutional Equities in a research note.
According to the report, IGL and MNGL have achieved minimum work program (MWP) despite the disruption and the managements remain confident of achieving double-digit growth from next year.
“For FY22, we build-in volume growth of 14%, over FY20 levels, to 7.6mmscmd (v/s 6.4/4.6mmscmd in FY20/FY21),” they said. The companies also have growth strategies revolving around improving CNG infrastructure, increasing PNG penetration, and creating new synergies by bidding for new locations.
Other consequences of the pandemic may also have an effect on demand for CNG, which is primarily driven by the transport services segment. “Virtual connect has drastically impacted intracity and intrastate travel. Commercial segments are down as there is uncertainty regarding when traffic would return to restaurants and malls,” the note said.
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