Central UP Gas Limited (CUGL) is a joint venture between GAIL (India) Limited and Bharat Petroleum Corporation Limited (BPCL), formed in February 2005. CUGL is engaged in city gas distribution (CGD) in the cities of Kanpur and Bareilly in Uttar Pradesh. The CGD project in Kanpur commenced in April 2006 and that in Bareilly became operational in April 2007. CUGL won the second round of bidding for the geographical area (GA) of Jhansi. Moreover, the company commissioned its first compressed natural gas (CNG) station at Unnao (located between Kanpur and Lucknow) on January 19, 2014.
In June 2013, Indraprastha Gas Limited officially acquired 50 per cent in CUGL for about Rs 690 million. The stake was initially held by the Asian Development Bank, IDFC Private Equity and IL&FS Investment Managers Limited. The remaining share in the company is held by GAIL (India) Limited and BPCL with 25 per cent stake each. CRISIL has assigned an A2+ rating to CUGL, which indicates a strong degree of safety regarding timely fulfilment of financial obligations.
CUGL has four business segments in Kanpur and Bareilly: transport (compressed natural gas [CNG]), domestic (piped natural gas [PNG]), commercial and industrial. Among these, the transport segment dominates the sales in both cities.
As far as infrastructure and customer base are concerned, CUGL operated 11 CNG stations in Kanpur and one in Bareilly as of end-2012-13. An estimated 34,403 vehicles were using CNG. In addition, 12 industries and 17 commercial connections were commissioned. With regard to the PNG segment, the company had provided connections to 2,998 domestic, 48 commercial and 32 industrial customers by the end of 2012-13. During 2012-13, CUGL witnessed an increase in sales of both CNG and PNG. While CNG sales increased by 15.79 per cent to 44 million standard cubic metres (mmscm), PNG sales increased by 7.69 per cent to 14 mmscm. During 2012-13, CUGL submitted an expression of interest (EoI) to the Petroleum and Natural Gas Regulatory Board (PNGRB) to lay a CGD network in Ramabai Nagar (Kanpur Dehat) district. Subsequently, the PNGRB web-hosted the EoI and invited comments from various stakeholders.
CUGL recently undertook a price revision for PNG and CNG in its assigned GAs. It increased the price of commercial PNG in Kanpur and Bareilly to Rs 51.75 per standard cubic metre (exclusive of state value added tax) with effect from April 1, 2014. The price of CNG (inclusive of all taxes) was increased in Kanpur, Unnao and Bareilly regions with effect from February 9, 2014.
In order to improve operational efficiency and ensure the provision of quality services, CUGL is taking several IT initiatives. However, due to the high costs involved in the implementation of these measures, CUGL is carrying out the process in a phased manner. To begin with, the company has implemented the SAP B1 ERP (enterprise resource planning) solution in its departments along with a unique customised billing process for its large domestic customer base. It will subsequently migrate to higher SAP versions to ensure that all activities are controlled and monitored properly. Further, it plans to implement the supervisory control and data acquisition (SCADA) system, which will provide improved connectivity and data acquisition at CUGL’s CNG stations.
Given below are some of CUGL’s initiatives in advanced metering and customer relationship management (CRM).
Advanced metering initiatives
CUGL receives gas from GAIL (India) Limited at its Fazalganj and Chakeri city gas stations in Kanpur, and at the Bareilly Rohella station after reducing the gas pressure to 19 bar. Subsequently, CUGL uses ultrasonic flow meters, process gas chromatographs and a computerised workstation to check the gas flow and quality at these gas stations. While the ultrasonic flow meter helps in the accurate estimation of gas flow, the process gas chromatograph determines the gas composition and calculates its gross heating value. In this regard, the company plans to install its own ultrasonic flow meters in Kanpur, Bareilly and at its upcoming Achalganj city gas station.
Once CUGL receives gas from GAIL (India) Limited, it reduces the gas pressure to different levels according to the pressure reduction system used by different customers. Each system consists of at least two trains of pressure reduction, of which one acts as a standby. In order to keep track of the quantity of gas sold, CUGL has adopted advanced metering systems. In this context, GSM-based metering technology has been installed for industrial users. This ensures high efficiency without any time lag. With regard to the domestic and commercial segments, mechanical meter reading facilities are being used to reduce costs for customers.
CNG sales are monitored through Coriolis flow meters. According to CUGL, these meters result in low operation costs and high measurement accuracy. Further, they need to be serviced once in five years at the Fluid Control Research Institute in Palghat. CUGL has adopted diaphragm and rotary positive displacement (RPD) flow meters in the commercial, domestic and industrial segments. The company has also installed RPD volumetric flow meters with electronic volume correctors, which are used to measure the quantity of gas sold to customers. International standards for flow measurement such as AGA 7 or AGA 8 are utilised for this purpose. These mechanisms are required as gas is sold to consumers at different levels of pressure and flow rates. Further, the corrected volume at base conditions is converted into energy units (million British thermal units) for billing purposes.
CUGL has set up a CRM cell for receiving and monitoring complaints, providing timely feedback to consumers, updating customer records and exchanging information. A dedicated customer care number and email address have been provided where customers can register their queries or complaints. The number is available on the company’s website, bills, leaflets, promotional material and registration forms. A complaint entry system has also been put in place for registering each complaint against a unique number. To ensure timely resolution of issues, individuals/departments are allotted a complaint number and the complaints are periodically reviewed by the management. The customer is informed about the action taken via telephone or email. The company also maintains an annual customer satisfaction index through an independent third-party agency. The company has a dedicated call centre in place with a dynamic interactive voice response system that provides round-the-clock customer services in Kanpur and Bareilly.
CUGL reported a turnover of Rs 1,467.4 million during 2012-13, an increase of 29.4 per cent over the corresponding period of the previous year. However, during the year, CUGL experienced a 0.66 per cent decline in net profits to Rs 209.9 million vis-à-vis Rs 211.2 million in 2011-12.
CUGL is emerging as an important player in the CGD segment. Realising the importance of IT in CGD operations, which involves supplying gas through a complex pipeline network, it has taken several IT initiatives. These include implementation of ERP, SCADA, CRM and advanced metering initiatives. However, taking into account the competitive and complex nature of the CGD business, CUGL needs to constantly undertake such measures to improve the efficiency of its operations.