Takes steps to develop & monetize AP’s natural gas eco-system

With the aim of achieving self-sufficiency in the state’s energy ecosystem the government of Andhra Pradesh led by Chief Minister Mr Jagan Mohan Reddy is taking steps to revive the AP gas Infrastructure Corporation an organization which had been dormant for quite some time.

Natural gas has often been touted to be the best source of green fuel keeping its ecofriendly properties in mind. And with Andhra Pradesh being one of the top producers of natural gas in the country securing self-sufficiency should come naturally.

However despite AP being among the top producers of Natural gas it lags far behind in consumption. High VAT & deficient pipeline infrastructure are often cited as the top reasons for the snarl growth of this sector.

The state government now seems to have identified these deterrents and is taking steps to get this sector up and running again.

And to showcase its seriousness in kick starting the state’s natural gas ecosystem the government proposes to make APGIC the nodal agency for all natural gas (i.e. LNG, PNG, and CNG) in Andhra Pradesh. 

It has also roped in Lt Cdr Ravindranath Reddy (Retd.) a former marine commando to get this organization up and running again. ‘The government of Andhra Pradesh understands the significance of natural gas in today’s day and age and we therefore want our state to be self-sufficient in natural gas’ said the recently appointed Managing director of APGIC, Lt Cdr Reddy speaking exclusively to Vizag Industrial Scan.

Bringing down VAT 

To begin with the state has decided to finally bring down VAT on natural gas which is said to be the highest in the country.

‘I am happy to inform you that we are bringing down VAT on natural gas from a high of 24% to 5% which shall be promulgated shortly. This has been a long standing demand of industry’ cited Lt Cdr Reddy.

This move is said to augur well for the industry as with a high VAT the state was losing much needed revenue as players were sourcing natural gas from other states where VAT was much lower. It is informed that most states have a VAT of around 5% on natural gas.

Natural Gas Policy

In addition a new policy on natural gas is said to be in the making which shall soon be unveiled. 

‘Once the policy is out you will see a slew of incentives being offered to private industry which will help bolster the natural gas eco-system in the state’ said Lt Cdr Reddy.

And with AP’s rapid industrialization of its economy the new gas policy will certainly propel investments into the sector as Natural gas can play a crucial role in meeting the gargantuan energy demands of the industry. 

‘We recognize the fact that industry is going to play a major role in Natural gas consumption and we therefore want to reach out to all prospective industries and sensitize the benefits of NG as a green and clean fuel for them’ said APGIC’s MD.

Typically industries having huge power requirements are a potential Natural Gas prospects. So steel plants, Ferro alloy units, Pharma companies etc. are some sectors where utilization of natural gas can not only be cost efficient but also environmentally acceptable.

Boosting Pipeline Infrastructure

However a major impediment that is obstructing the state’s ambition of achieving self-sufficiency in natural gas consumption is the state’s glaringly deficient pipeline infrastructure. Large areas of AP’s territory are yet to be covered with the necessary pipeline infrastructure. 

‘To solve the pipeline infrastructure gap we at APGIC are exploring various methods and will be undertaking measures which shall make gas available to far fledged industries’ said Lt Cdr Reddy.

GGPL

Speaking on the Godavari gas pipeline (GGPL) a joint venture formed between APGDC and HPCL for city gas distribution APGIC’s managing director identified this as a highly profitable business and informed that here a considerable stretch of pipeline has been laid in the east and west Godavari districts.

‘More than 50% pipeline has been laid connecting households in these districts and more work is being carried out. In addition CNG stations have also been established’ he said.