Natural Gas Supply & Demand Outlook MMSCMD

1. Assocham -11th Energy Summit Indian Oil & Gas Sector City Gas distribution - Opportunities & Challenges PPG SARMA, CEO GSPC GAS COMPANY LIMITED 17 th Oct 2008

2. Natural Gas Supply & Demand Outlook MMSCMD

3. TRANSMISSION INFRASTRUCTURE • Under Operation: • GAIL: HVJ pipeline, Dahej-Vijapur pipeline, Dahej-Uran pipeline. • GSPL: intra-Gujarat transmission network • Under construction: ( Completion in 2008) • Reliance: 48” East-West pipeline • GSPL’s 30 “ Bharuch to Jamnagar pipeline • Under Planning / Approvals: • Kakinada to Tamilnadu, • Kakinada to West Bengal • Dabhol to Bangalore

4. City Gas Infrastructure • Limited development of CGD networks • CGD’s in operation : • - In New Delhi (M/s Indraprastha Gas Ltd) • - Surat, Ankleshwar, Bharuch in Gujarat (M/s Gujarat Gas Co.) • - Mumbai, Maharastra (M./s Mahanagar Gas Limited) • - Upper Assam (M/s Assam Gas Company Ltd.); • - Vadodara, Gujarat (M/s Vadodara Municipal Corporation); etc. • New players like M/s Adani Energy Ltd., M/s Sabarmati Gas Limited & M/s GSPC Gas Company Ltd., and GAIL& OMC JV’s • Daily Sales Volumes: 8.5 MMSCMD + • The combined distribution network length of 8000 Kms. • Domestic customer base 600,000 + • CNG customer base is to the tune of 400,000.( 5th in the world) • CNG Stations: 400+

5. KEY TRENDS • Acceptance of NG as a viable alternative to liquid fuels • NG share in the energy basket set to increase (Presently about 8.5%) • CGD players have the market relying heavily on APM gas and support of judiciary • Couple of CGD players relying entirely on market driven gas pricing and still succeeded • Market driven prices and high R-LNG prices finding buyers in the market • CGD sector likely to get some priority in the soon to be announced “ Gas Utilization Policy”

6. OPPORTUNITIES • Improving Gas supply position in Indian markets due to local new finds. • Accelerated development of transmission networks • The enactment of PNGRB ACT 2006 is a welcome sign to look at authorizing the entities to develop city gas networks • Standardization in terms of quality, safety & standards of services. • Huge Potential for employment generation • Industry growth ,development incl. equipment suppliers ,vendors , contractors

7. ISSUES & CHALLENGES • CGD Industry: • Gas sourcing: To compete with bulk consumers power /Fertilizer • Availability of Trained & experienced manpower • Absence of formal certification and licensing of contractors • Low awareness in the general public aboutPiped Gas • CGD Operator: • Ensuring multiple gas sourcing options for flexibility in supplies / redundancy • Ensuring proper safety distance from the building & premises at all locations in congested cities / towns. • Contd….

8. Contd… • Effective coordination with local municipal authorities & utilities • Awareness creation amongst the customers/ general public • Inexperienced contractors/ Unauthorized extension of pipelines • Effective monitoring of emergency control room activities to quickly address any potential damages to the networks & thereby reducing its potential side effects • Use of non standard equipments, cylinders (CNG) by customers

9. Challenges for PNGR Board • Ensure proper facilitation for market creation stage leading to market take off stage and further to market maturity stage • Clear cut policy framework & accelerated approval process for pipeline infrastructure creation . • To ensure formulation of codes/ standards and making use of these standards mandatory for all Pipeline/CGD players. • Put in place a level playing field & robust monitoring mechanism post authorization of entities

10. ROLE for Regional Boards • Adopt a proactive role in coordination with municipal authorities & all utilities • Continuous awareness creation amongst the customers/ general public. • Facilitate setting up Technical institutes/collages for courses in “gas engineering “, training institutes offering certified courses. • Develop framework for contractor certification • Issue of licenses to local contractors and their manpower for undertaking the gas installation related works in the customer premises to ensure consistency of output.

11. Challenges for Local Municipal Corporations • Assessment of Operating company’s Emergency preparedness ( Mock drills offsite/onsite etc) • Oversee safety aspects for operating city gas networks. • Properly planned utility corridors • Strict enforcement of safe distances for networks from the population • Speedy permission/ approval process networks /CNG stations. • RTO’s to enforce surprise checks to identify CNG leakages on the vehicles on roads.

12. CUSTOMER EXPECTATIONS • Comparable/affordable gas prices vis a vis liquid fuels • Stability of Gas Prices • Uninterrupted gas supplies. • Fast response times in case of emergencies • Quality of service

13. NEW PRODUCT TECHNOLOGIES/TRENDS • De-centralized power generation • De- centralized energy consumption. • co-generation, • combined heat& Power (CHP), • combined cooling ,heat& Power (CCHP) Focus on Maximum use of available Heat of Gas molecules

14. GSPC Group • Presence across entire Value chain • Turnover > Rs. 5000 Cr Upstream Downstream GSPC GSPL GSPC Gas/SGL GSEG Marketing Distribution E&P Trading Transportation Power • Plans for Expansion of downstream interests into other states

15. GSPC • Only State PSU in Oil & Gas E&P • Dominant player in E&P sector • Acquiring exploration blocks • Strategic alliances for sourcing of gas • Interests in various National & International exploratory blocks • Andhra Pradesh, Gujarat, Mumbai, Assam, Tamil Nadu • Australia, Egypt and Yemen • Successful bidder in NELP II, III, IV and V • Various discoveries made so far including • One of India’s largest gas discovery in KG Basin • Others : PK – 2, Tarapur, Sanand East Block

16. GSPL GAS GRID – A growth story • Presence in 12 Districts. • Pure Transmission Play • Handles 20 MMSCMD

17. 23 CNG stations, 29000+ Domestic, 360 + indl. Customers 1.50 MMSCMD flows

18. FUTURE OUTLOOK • Major transmission projects in execution /on drawing board stage • Huge supply augmentation through KG basin gas and RLNG terminals, • More & more CGD networks through existing as well as new players

19. CONCLUSION • Indian market is a key opportunity for players interested in distribution. • Issues and challenges regards to safe operation needs to be tackled. • Huge employment /Ancillary development opportunity • There is huge business space to accommodate multiple players GSPC Group would continue to play a very active role in the entire value chainin Gujarat as well as other states in India

20. THANK YOU VERY MUCH FOR YOUR KIND ATTENTION. Contact Info: e mail: ppgsarma@gspc.in Mobile no: 09925019099