GOING STRONG

Oman 2016 | ENERGY | INTERVIEW

TBY talks to Nalin Chandna, General Manager of the National Gas Company (NGC), on the outlook for gas, key challenges, and maintaining safety standards.

Nalin Chandna
BIOGRAPHY
Nalin Chandna is a Chartered Accountant from The Institute of Chartered Accountants of India. He is a seasoned professional with 18 years of significant experience in improvising operations, impacting business growth, and maximizing profits. He is currently the Group General Manager for National Gas Company, where he has worked for more than five years in various senior positions. Before joining National Gas Company, Nalin has worked with such reputed organizations as Monsanto, Wal-Mart, Motorola, Carrier Airconditioning, and Ernst & Young, and brings along his diverse and rich experience across different industries and geographies.

Can you elaborate on NGC's role in the Omani market, and how you are positioning yourself in the gas sector?

We have been here for more than three decades, and NGC has traditionally operated as a company catering only to the Omani market. Over the last seven or eight years we have branched out into other geographies like the UAE and Saudi Arabia. We also acquired Shell's LPG business in Malaysia in 2012. Oman, being the home country, has always been the focus. However, we have established a strong presence on the international stage in order to emerge out of local market challenges. We are trying to increase our revenues in Oman by pushing for more quantity from the Ministry of Oil & Gas. Our efforts with the Ministry of Commerce & Industry have been focused on price increases, which have not been reviewed for a long time. We have been consistently compliant with Omanization requirements and are committed to developing local talent by training and hiring as many Omanis as possible. While prices remain a factor, we are making all efforts to increase revenues not only from the existing product lines but looking at alternative streams by innovation and engineering.

How does NGC envision growth and expansion into new sectors?

In terms of gas, we need to ensure compliance with regulatory requirements. We have been an LPG player all these years, so moving into a different segment will require a different set of licenses and regulatory approvals. It will require capital investments as well. These are the factors to consider and challenges that can be overcome; it is just a matter of time.

What are the major changes or transformations anticipated within the sector, specifically in regards to gas prices?

With international hydrocarbons prices remaining low, the country's overall revenues are on the decline. So far the domestic prices for in-country consumption are protected but the government bears the strain. In the longer term this leads to high deficits, prompting international borrowings, which comes at a cost. The reduction in subsidies is one way of reducing government deficit and this may be easier than ever to implement in the current situation, where international prices have come down so significantly. However, subsidies have always been a sensitive subject for governments the world over and have been easier to reduce in theory rather than in practice. There are always long-term effects, and the public reaction is hard to predict, especially considering gas is a social utility product being consumed on mass.

What are the key challenges impacting your business and the sector?

One challenge is that our LPG cylinders all look exactly the same. In other countries, bottling companies have their own branded bottles, which are easily recognizable; they may be painted red, orange, or yellow, for example. In Oman this rule has not been applied—all cylinders are silver colored—and we fill any cylinder that comes in as long as it is not an expired cylinder. This is a problem for us because if a cylinder comes in that is not ours and is expired, we are still required to replace it. The smaller players push expired cylinders back into distribution, and they eventually end up back in our channel for filling because they are difficult to identify. Unsafe cylinders circulating in the market can be a big safety hazard to citizens. We have been pushing for branding of cylinders for a long time. Branding of cylinders will go a long way to making the companies responsible for their products. We maintain the highest safety standards and we are ISO certified so safety is all the more important considering the flammable nature of the gas that we deal in.

What are NGC's expectations for this year, and your outlook on the sector for the next few years?

Luckily, we are in an industry where there is consistent demand. LPG is used daily in both households and industries. We expect 2015 to be a good year from a demand perspective. Medium to long term, we anticipate growth in the company. We have plans to expand into different countries and to diversify into different alternative fuels; the future looks bright.