Risk analysis and mitigation for the city gas distribution projects

Abstract

Purpose This study aims to identify the operational and financial risks associated with the city gas distribution project in India and suggest appropriate strategies to mitigate them. Design/methodology/approach This study aims to identify the operational and financial risks associated with the city gas distribution project in India and suggest appropriate strategies to mitigate them. The survey data is evaluated using factor analysis to understand the latent structure of the critical risk factors. Second, the author uses Situation, Actor and Process–Learning, Action and Performance framework to suggest the mitigation strategies for the identified operational and financial risk factors. Findings The research identified five critical risk factors and suggested 39 mitigation strategies to address operational and risk factors impacting CGD projects. The findings of this research will enable the CGD companies to formulate long-term strategies for their business and adopt proactive measures to mitigate the operational and financial risks causing delay and increasing project costs. This study also highlights the importance of government support in developing a conducive environment for CGD industry to thrive. Originality/value The CGD projects are critical for natural gas growth in India’s energy mix. The project delay leads to a rise in the total cost involved and increases the payback period for the CGD companies. To the best of authors’ knowledge, this research is first of its kind that identifies the critical operational and financial risks affecting CGD projects in India and suggests the mitigating strategies for them.

A review on prospective risks and mitigation for oil and gas projects: implication for Indian CGD companies

“…This section discusses each risk and its potential implication for the CGD sector in India. Weighted average rank Sources Project cost escalation One (Kassem et al, 2019(Kassem et al, , 2020c(Kassem et al, , 2020a(Kassem et al, , 2020bHamzah et al, 2019;Kassem et al, 2019c); [Dey (2012), project risk management using multiple criteria decision-making technique and decision tree analysis: a case study of Indian oil refinery]; (Bin Seddeeq et al, 2019;Altyib and Alhakim, 2018) Improper project management Two (Kassem et al, 2019(Kassem et al, , 2020c(Kassem et al, , 2020a(Kassem et al, , 2020bHamzah et al, 2019;Kassem et al, 2019c;Rawat et al (2021a) risk analysis and mitigation for the CGD projects) Change in economic parameter (inflation, interest rate) Three (Khodeir and Mohamed, 2015;Van Thuyet et al, 2007;Kassem et al, 2019;Altyib and Alhakim, 2018;Kassem et al, 2020c;Hamzah et al, 2019;Mubin and Mubin, 2008;Kassem et al, 2019c;Mubin and Goryainov, 2007); [Dey (2012), project risk management using multiple criteria decision-making technique and decision tree analysis: a case study of Indian oil refinery]; (Van Thuyet et al, 2007;Rawat et al (2021a) risk analysis and mitigation for the CGD projects) Change in the currency exchange rate Four (Kassem et al, 2020a(Kassem et al, , 2020b(Kassem et al, , 2019(Kassem et al, , 2020cHamzah et al, 2019;Mubin and Mannan, 2013;Kassem et al, 2019c;Rawat et al (2021a) risk analysis and mitigation for the CGD pr...…”

“…Moreover, developing a team of technicians to operate and maintain the CGD network is a challenge for long-term business (Gupta et al , 2017; Sircar et al , 2017). Rawat et al (2021a) identified 22 risks causing a delay in the commencement of the CGD projects and suggested 39 strategies to mitigate those risks. However, the research does not address all the risks causing a delay in CGD projects and recommends developing a comprehensive list of risk factors delaying the CGD projects.…”

Modeling the strategies to accelerate the natural gas business market growth in a developing country

“…Developing the natural gas business is a capital-intensive process and has a long payback period (Ishwaran et al , 2017; MoPNG, 2021). The other significant issues restricting natural gas growth are a lack of trained talent, absence of market-based pricing, price-sensitive consumers and taxation (Khan, 2018; Rawat et al , 2021; PIB, 2020). Zou et al (2018) have emphasized the aggressive development of domestic production, pipeline transportation capacity and LNG import and storage capabilities to expedite natural gas growth.…”

“…The major gas-consuming sectors in India are the fertilizer, power and city gas distribution businesses with 28%, 24% and 17% contributions, respectively. The country has introduced several reforms to boost the natural gas market growth, such as the implementation of a pricing mechanism, the introduction of the Hydrocarbon Exploration Licensing Policy (HELP), Open Acreage Licensing Policy (OALP) and city gas distribution licensing rounds (Abbasi, 2018; PPAC, 2021; Rawat et al , 2021). However, the results of these initiatives are not promising and encouraging.…”

“…A recent study identified 25 barriers restricting the natural gas market growth in the country and categorized them under four categories: operational, supply, customer-centric and government (Rawat and Garg, 2021; Rawat et al , 2021). The result identified operational and supply issues as critical barriers to natural gas market development.…”