Ultra Gas To Invest Rs 1,400 Crore On LNG Hubs For Long-Haul Automotive, Other Industries

Ultra Gas & Energy Ltd. plans to set up liquefied natural gas retail hubs across India to provide clean fuel options for long-haul automotive operators, and industries not penetrated by natural gas pipelines.

The cleantech firm owned by Middle East-based green fund, Exponentia Ventures Pvt., will invest Rs 1,400 crore to set up around 200 future-ready retail hubs over the next two to three years.

“The retail hubs apart from providing LNG can also cater to CNG, electric, and hydrogen vehicles in the near future,” said Mukundan Iyer, chief executive officer of Ultra Gas.

To start with, the company will open 12 retail hubs on the Golden Quadrilateral, north-south highway, and east-west highway closer to industrial belts of steel, cement, petrochemicals, and mines. “We plan to have at least 25 retail hubs in the next one years' time,” Iyer said.

The plan is to set the retail hub over an acre of land, and be able to cater to four to five medium and small enterprises apart from meeting the demand from automotive segment, Iyer said. Each outlet will be able to supply 15-16 tonnes of LNG a day and can store up to 168,000 litres of liquefied gas, he said.

The cost of setting up the company-owned-and-operated outlets will be around Rs 6-7 crore each. “We will also look at franchise model going ahead if investors with land are willing to contribute to network augmentation,” Iyer said.

He said the economics of efficiency and savings will help most of the industries and the fleet operators to convert to LNG in the near future. "LNG can also be the best candidate amongst the available fuel to achieve the government's clean emission targets, before EV and hydrogen becomes a norm," he said.

LNG vehicles can be slightly costly, Iyer said, but its ability to travel over 1,200 kilometres in one fill, savings on travel time and operating costs, and obligation to meet the carbon emissions targets, will compel companies to adopt LNG in the near future.

The company, he said, has secured a considerable quantity of LNG and is in talks with various domestic and international suppliers to secure up to 0.5 million metric tonnes per annum of LNG to meet its projected demand.

Ultra Gas has ringfenced its LNG demand through its tie-up with GreenLine Logistics Co., a 100% green logistics company. GreenLine has tied up with original equipment manufacturer—Blue Energy Motors, the first company to make LNG Trucks in India, for its LNG fleet.

Iyer noted that diesel consumption by long haul trucks is close to 20 MTPA, even if 10% gets converted to LNG, it would mean around 2 MTPA of LNG consumption.

“LNG is around 10% cheaper compared to high-speed diesel, besides it is 20% more efficient," he said. "We expect the price of LNG to cool further as the war in Ukraine will subside." 

There cannot be more favourable period than the present to convert to LNG, Iyer said.

The Indian government is planning to increase the usage of natural gas in its energy mix to 15% by 2030 from the current 6.3%, according to the Ministry of Petroleum and Natural Gas. To achieve that, LNG will play an important role as domestic production of natural gas has declined over the last six years.

LNG is the imported natural gas that is stored and transported under cryogenic temperatures (-162 degrees Celcius) in the form of liquid. The use of LNG is expected to increase to 70% by 2030 from 55% at present, if India has to achieve its energy mix target of 15%.