Mahanagar Gas Bets On BEST Buses, Trucks To Drive CNG, LNG Volume Growth
On average, CNG sales volumes account for over 70% of Mahanagar Gas' total sales volume, managing director Ashu Shinghal said.
Mahanagar Gas Ltd. has set an annualised volume growth target of 7-8% for fiscal 2025 as Maharashtra State Road Transportation Corp. and Brihanmumbai Electric Supply and Transport Undertaking roll out more and more buses powered by compressed natural gas, according to Managing Director Ashu Shinghal.
There is also growth opportunity in the liquified natural gas, or LNG, segment that caters to heavy trucks in India, he told NDTV Profit in an interview while explaining how all alternative fuels are expected to co-exist as India tyres to sway away from highly pollutive fuels like diesel and petrol.
CNG Segment
On average, CNG sales volumes account for over 70% of Mahanagar Gas' total sales volume, he said. The 4% year-on-year volume uptick in this segment primarily drove the company's volume growth in the first quarter of fiscal 2025. The company has a total of 247 CNG stations and plans to add 50 more in the current fiscal, he said.
Singhal is optimistic about MSRTC's CNG bus additions in the coming years. The transport corporation added 90 new CNG buses in the April-June period of 2024, with more expected throughout the year, he said.
Singhal also mentioned that the number of BEST buses on the road has not increased due to large queues in Mumbai, but he does expect BEST to roll out more CNG buses going forward.
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Acceleration In LNG Retailing
"India cannot go away with LNG," Singhal told NDTV Profit as he highlighted that 55% of India's LNG needs come from imports, while 45% is domestically produced.
If India needs to find a solution to replace diesel-powered heavy trucks or heavy-tonnage commercial vehicles, the only option in the mid-segment is LNG, he said. The LNG potential is huge, and the company plans to cash in on it, Singhal said. With one operational station at Sabroli with daily volumes of 3,000 kilograms per day in the first quarter, Mahanagar Gas is to set up four more LNG stations in the current fiscal through its joint venture with Baidyanath LNG.
India currently has over 40 lakh heavy trucks running on roads, Singhal said. "Even if 10% of this number were to be converted, the potential for LNG imports is very high," he stated.
Threat From Electrical Vehicles
"Electrical vehicles cannot eat away at all the market share of CNG, petrol, and diesel," stated Singhal. Highlighting the current problems regarding electrical vehicles, such as heavy battery weights, charging problems, and the high cost of EV trucks, Singhal said the EV is not a suitable option in the trucking segment.
The Pecking Order
Mahanagar Gas feels that there is a place for all fuels to co-exist in India.
"If India were to move away from pollutive fuels like diesel and petrol, the first option would be CNG and LNG," said Singhal. CNG is not only less polluting, it is also 50% and 25% cheaper than petrol and diesel, respectively, he said. "The government has also been promoting growth in the segment by allocating more cheap gas to city gas distributors."
Green hydrogen might contribute in the future, but it would take some time to build the necessary infrastructure and address the problem of hydrogen availability.
Thus, the market could first move on from petrol and diesel to CNG and LNG. When EVs and green hydrogen mature with respect to infrastructure, affordability, and connectivity, the fuels can take over, according to Singhal.
