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CGD-II: What can stall the golden run?
Nov 29: Even though the picture is rosy, there are indeed short to medium term risk to the CGD story.
8For one, when BS-VI norms are in place, the basic rationale for allowing access to subsidised gas by CGD companies -- that of lowering the level of particular matter in Indian cities -- will erode as BS-VI norms lower pollution levels significantly.
8If the price of domestic gas is raised or made at par with LNG, CGD will not be able to compete with liquid fuels at higher gas prices in the transportation segment, particularly if the price of crude stays low.
8Then again, the advent of the electric car and its impact on the CGD industry needs to be investigated properly in terms of its cost-benefits.
8Even though the Supreme Court ban on FO and pet coke in the NCR are positive steps, industrial consumption of gas will still remain hostage to economics of alternative fuels such as LPG.
8In the slightly longer run, if the price of electricity falls -- the latest solar bids in Mexico are at a price of a little over Rs 1/kwh -- even PNG demand can peter out as Indian kitchens could then switch to electric instead of gas cooking.
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