IGL to invest Rs 1,700-1800 crore in FY25, plans 80 new CNG stations

Indraprastha Gas Ltd (IGL) plans to invest between Rs 1,700 and Rs 1,800 crore as capital expenditure in 2024-25. The city gas distributor is eyeing higher volumes with a focus on expanding compressed natural gas (CNG) distribution, and improving volume and profitability with liquefied natural gas (LNG) and compressed biogas (CBG).

IGL sells CNG and piped natural gas (PNG) in Delhi, Gautam Budh Nagar, Ghaziabad, Rewari, Karnal, Kaithal, Kanpur, Muzaffarnagar, Ajmer and Banda. The company generates 75 percent of its sales volume from CNG business. In 2023-24, its CNG sales volume came in at 2,298 MMSCM (million standard cubic metre).

“This year we are targeting Rs 1,700-1,800 crore (in capital expenditure). Last year we did Rs 1,270 crore. Now this Rs 1,700-1,800 crore will mostly be in our core areas and some amount in the LNG and CBG,” IGL Managing Director Kamal Kishore Chatiwal told investors in a recent call. 

The company has set a target of growing its overall daily average sales volume to 9.5 MMSCM in the current financial year from 8.4 MMSCM per day in the previous year. The management noted that there will be a “special” focus on an increase in CNG sales in the new geographies along with an increase in sales in the industrial segment.

IGL currently operates 882 CNG stations across geographies. The company added 90 new CNG stations and upgraded 36 existing stations last year. As per the company’s investor presentation, it plans to commission around 80 CNG stations during the current financial year.

Meanwhile, IGL is also focusing on LNG and CBG to improve volume and profitability. IGL has already commissioned one LNG station in Ajmer, and 5-6 more stations are in the advanced stage of planning and construction, which are likely to come up this year. The company is also planning to add 10 CBG plants this year.

“This year, we are expecting that we will be able to diversify LNG and CBG sourcing. We will spend around Rs 400 crore or something like that,” the management said.

The focus on CBG comes as the government has mandated the blending of CBG in CNG for transport and PNG for households in a phased manner from the financial year 2025-26. The government targets 5 percent blending from 2028-29.

The capital expenditure earmarked for 2024-25 does not include any inorganic growth opportunity or some license renewal opportunity that comes up.

IGL has a 50 percent stake each in Central UP Gas Ltd (CUGL) and Maharashtra Natural Gas Ltd (MNGL). CUGL is engaged in the city gas distribution business in Kanpur, Bareilly, Unnao, and Jhansi in Uttar Pradesh, while MNGL distributes city gas in Pune, Pimpri-Chinchwad, Talegaon, Chakan and Hinjewadi.

Indraprastha Gas is a joint venture between the state-owned Gas Authority of India Ltd and Bharat Petroleum Corp Ltd, with the Delhi government holding a 5 percent stake. The company’s consolidated net profit for 2023-24 grew 21 percent on year to Rs 1,985 crore.