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Journalism of Courage
GAIL India today approved a subsidiary to separate its gas transmission from gas distribution business and become eligible to bid for city gas distribution projects. The new entity will only sell CNG to automobiles and piped natural gas. “The setting up of the subsidiary will help in part for compliance of requirement of unbundling of the business for GAIL which may come in future,” said GAIL chairman U D Choubey. Seventeen cities have been identified for which the new arm would seek direct authorisation from the Petroleum & Natural Gas Regulatory Board (PNGRB).
GAIL operates a pipeline network of over 6,700 km, including the main line HBJ, and had been acting as mere transporter before it started direct retail through joint ventures Indraprastha Gas Ltd and Mahanagar Gas Ltd. With the gas regulator recommending dismembering of the two businesses for any company to be eligible for distribution projects, the subsidiary had become necessary to shift the parent company’s equity in the existing city gas distribution JV, as well as for new ventures. The new entity will sell CNG to automobiles and piped gas to households. GAIL will provide Rs 200 crore towards its equity and the subsidiary would borrow another Rs 300 crore.
It will take up distribution and marketing of CNG and auto LPG as fuel for vehicles, PNG for domestic/commercial use in various cities in India and abroad. It will set up infrastructure including natural gas compressor stations, pipelines, distribution points or retail outlets. Gail can form alliances with gas producers or strategic partners for each project.
