Central Gas Ventures - India

BULK LPG SYSTEMS FOR INDIA

BULK LPG SYSTEMS FOR INDIAPRESENTATION CONTENTS

1. LIQUIFIED PETROLEUM GAS (LPG) P. 3

2. BULK LPG P. 6

3. LPG IN INDIA P. 9

4. INDUSTRIAL OPPORTUNITIES P. 13

5. RESIDENTIAL OPPORTUNITIES P. 15

6. LPG SAFETY STANDARDS AND REGULATION P. 20

7. DEVELOPMENTAL BENEFITS P. 23

8. BACKGROUND ON CGV & PARTNERS P. 28

1. LIQUEFIED PETROLEUM GAS

BULK LPG SYSTEMS FOR INDIA

WHAT IS LIQUEFIED PETROLEUM GAS (LPG)?

1. LIQUEFIED PETROLEUM GAS (LPG)

• A hydrocarbon produced from natural gas processing and crude oil refining.

• One of the cleanest-burning fossil fuels.

• Extensive residential, commercial and industrial applications.

• More compact as a liquid than as a gas making it economical to store and transport as a liquid.

PAGE 4BULK LPG SYSTEMS FOR INDIA

1. LIQUEFIED PETROLEUM GAS (LPG)

• LPG with air won't ignite unless the source of ignition reaches at least 940 degrees Fahrenheit. Gasoline ignites at 500 degrees Fahrenheit.

• Non-toxic - can not contaminate soil or water.

• LPG tanks can be placed either above or below ground.

• A much lower carbon footprint than fuel oil, coal, or wood.

AN ENVIRONMENTALLY FRIENDLY FUEL


2. BULK LPG


BULK LPG2. BULK LPG

• Bulk LPG is delivered to a tank (ranging from 100 to 30,000+ gallons) using specialized LPG transport vehicles (referred to as “bobtails”).

• Tanks are installed at a customers site (either individual homes, apartment buildings, as well as commercial/industrial sites).

• Bulk LPG can serve one to thousands of customers through a reticulated distribution network.


THE BENEFITS OF BULK LPG2. BULK LPG

• Customers pay for actual metered consumption rather than pre-buying gas per cylinder.

• Improved safety as the LPG is externally stored.

• Reduced servicing costs as larger fewer storage units require fewer service calls.

• Improved privacy and convenience for residences.


3. LPG IN INDIA


LPG IN INDIA3. LPG IN INDIA

• LPG is the primary cooking fuel in India

• India is the fourth largest LPG market in the world and third largest in the domestic sector

• More than 130 million Indian households use LPG and residential consumers have been increasing at a rate of 8% per annum.

• The U.S. is expected to become a net exporter of LPG in the coming years and India could be a strategic market for U.S. LPG.


LPG SUBSIDIES IN INDIA3. LPG IN INDIA

ANALYSIS OF LPG IN 14.2 KG CYLINDER

1. SUBSIDIZED LPG

COST PROFIT PRICE COST PROFIT PRICE26.60 1.600 28.20 377.72 22.720 400.44

2. MARKET PRICE OF LPG


3. VALUE OF SUBSIDY (#2 LESS #1)


57%

INR/KG INR/CYLINDER

INR/KG INR/CYLINDER

INR/KG INR/CYLINDER

• Development in the LPG sector has been limited by significant government subsidies.

• These subsidies have negated any economic incentive to pursue the efficiencies offered by bulk LPG storage and distribution.

• As shown in the table, more than 50% of the value of residential LPG is subsidized by the Government of India.


PHASING OUT OF LPG SUBSIDIES3. LPG IN INDIA

• The removal of subsidies will result in middle and upper income Indian residential LPG consumers paying world market prices for LPG.

• This will provide a basis for introducing more efficient and cost effective bulk LPG systems.

• The removal of subsidies will also make it possible to offer new LPG based applications and appliances to residential consumers who have only been allowed to use subsidized LPG for cooking in the past.


4. INDUSTRIAL OPPORTUNITIES


4. INDUSTRIAL OPPORTUNITIES

• LPG’s Costs and Efficiencies

• Indian boiler manufacturers’ interest in promoting LPG boiler sales

• Indian oil company interest to sell more profitable LPG

DIESEL BOILER CONVERSIONS FOR INDIAN INDUSTRY

There are tens of thousands of diesel powered boilers in operation throughout India that can be targeted for conversion to LPG. It is possible to provide Indian industry with these conversions at no cost along with a guaranteed 10% energy cost savings. These attractive terms are possible based on:


5. RESIDENTIAL OPPORTUNITIES


VERSATILITY: RESIDENTIAL APPLICATIONS5. RESIDENTIAL OPPORTUNITIES

More than a dozen LPG applications available to residential households with Bulk LPG.


COMMUNITY GAS

• Metered LPG systems for communities without access to natural gas infrastructure. Can be converted to natural gas.

• Hundreds of LPG consumers can be connected to one large tank. Thousands can be served through engineered reticulated systems.

• LPG consumption is individually metered and billed.

• In the United States, Tanks are typically underground. Pipelines can be run with other utilities.



COMMUNITY GAS BENEFITS TO REAL ESTATE DEVELOPERS

• Alternative to all-electric power

• CGV/HBH can provide capital, installation, service and support

• Construction cost savings

• No need for unsightly individual tanks or inconvenient cylinders

• Virtually unlimited applications



• Cost Savings Based on economies of scale.

• Increased comfort and convenience Large selection of applications and

appliances that improve life quality.

• Improved Safety LPG is externally stored. Gas constantly

maintained to appliance systems.

• Improved Convenience No out-of-gas complaints. No hassles

securing and storing cylinders.

COMMUNITY GAS BENEFITS TO HOMEOWNERS



6. LPG SAFETY


LPG SAFETY STANDARDS AND REGULATIONS6. LPG SAFETY

• The National Fire Protection Association (NFPA) is an organization charged with creating and maintaining building codes and other fire prevention standards.

• Fire departments, insurance companies, manufacturing associations, unions, and trade organization are just a few of the types of entities that are included in the NFPA.

• NFPA 58 is the established guide for LPG safety codes and standards. It is regularly update and revised by the NFPA every 3 years.

• NFPA 58 and the International Fire Code are similar in their treatment of LPG, and both are utilized by the U.S. Department of Labor, the Department of Homeland Security, and the Environmental Protection Agency.


LPG SAFETY STANDARDS AND REGULATIONS


6. LPG SAFETY

7. DEVELOPMENTAL BENEFITS


DEVELOPMENTAL BENEFITS - INFRASTRUCTURE7. DEVELOPMENTAL BENEFITS

• Introduction of bulk LPG distribution technology will replace inefficient and costly cylinders with bulk installations that offer greater operating efficiencies, convenience, and safety.

• Development of appropriate safety codes for bulk LPG and residential distribution will make the LPG market more accessible.

• Consumers that are away from natural gas pipelines can be provided with an immediate solution. Bulk LPG installations can be converted to support natural gas once/if pipelines arrive.

• Environmental benefits such as promotion of new applications of LPG that will replace coal/fuel oil and greater efficiency with the transport of LPG.


DEVELOPMENTAL BENEFITS – TECHNOLOGY TRANSFER & MARKET REFORM7. DEVELOPMENTAL BENEFITS

• Partnerships with existing LPG distributors in India will allow transference of world-class operating and technical know-how.

• The efficiencies of bulk LPG can partially mitigate the impact of the removal of residential LPG subsidies in India, which currently cost the Government more than $4 billion USD (approx. 195 billion INR) annually. The Government of India’s strategy to phase out LPG subsidies on affluent Indian households can be coordinated with the introduction of bulk LPG systems.


DEVELOPMENTAL BENEFITS – HUMAN CAPITAL GROWTH7. DEVELOPMENTAL BENEFITS

• Provide training to an expanded group of skilled LPG technicians who will be qualified to install and service bulk LPG systems according to internationally accepted standards.

• Prospective retraining of unskilled LPG cylinder distributors to provide them with the knowledge and skills to install and service bulk LPG systems.


DEVELOPMENTAL BENEFITS – ENVIRONMENTAL7. DEVELOPMENTAL BENEFITS

• Reduced pull on the electric grid• One home using gas in lieu of electric appliances for just water and space heating

effectively offsets about 8.5 tons of carbon emissions per year (more than the average annual emissions from a vehicle)

• Gas water heaters produce 60% less carbon emissions than electric water heaters• Propane is non-toxic and insoluble, so it offers minimal risk to aquifer and other

ground water supplies• 10 wood burning houses create as much particulate pollution as 10,000 houses with

gas fireplaces


8. BACKGROUND ON CGV & PARTNERS


CENTRAL GAS VENTURES8. BACKGROUND ON CGV & PARTNERS

• An international project development company founded in 2000 that specializes in developing and managing bulk LPG ventures in emerging markets.

• In Jordan, CGV was the first to introduce bulk LPG technology in 2005, which now accounts for nearly 10% of Jordanian gas consumption.

• In the West Bank, CGV has been responsible for the engineering of reticulated systems that will be connecting thousands of residential housing units.

• In Iraq, CGV has been active in the Industrial sector.

FERRELLGAS8. BACKGROUND ON CGV & PARTNERS

• For more than 65 years, Americans have relied on Ferrellgas for their residential, industrial/commercial, and agricultural LPG needs.

• LPG industry leaders with more than 1 million Customers in the United States.

• Ferrellgas is the 2nd largest LPG company in the U.S. and operates in all 50 states and Puerto Rico.

• Since 1994 Ferrellgas has been publicly traded on the NYSE under the ticker symbol FGP.

HBH GAS SYSTEMS8. BACKGROUND ON CGV & PARTNERS

• An award-winning, recognized leader in the design and implementation of Central Gas Systems

• International Project Experience in Bulk LPG in Emerging Markets

• HBH systems: 13 states, over 25,000 customers in US and over 20,000 in the Middle East

• HBH Egypt is a gas distribution and network company that specializes in getting clean, economical gas fuel to the Egyptian population with a focus on expanding Egypt’s natural gas infrastructure.

Thank You

BULK GAS SYSTEMS FOR INDIA

Beau LendmanPresident

Central Gas Ventures, Inc.1600 Tysons Blvd., Suite 600

McLean, VA 20102 USA703-276-1616 USA

[email protected]

mailto:[email protected]

http://www.centralgasventures.com/

Central Gas Ventures - India

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