GAIL lines up Rs 450 crore for city gas

Irrespective of the legal tangle surrounding the award of city gas licences, GAIL India is going forward with its plans to roll out networks in the four cities it won in bidding last year.

GAIL subsidiary GAIL Gas had won four out of the six cities put under the hammer by the Petroleum and Natural Gas Regulatory Board (PNGRB) in March last year.

M Ravindran, CEO of GAIL Gas, said the company started rolling out networks in these four cities around eight months ago.
The rollout is expected to cost Rs 450 crore over the first 5 to 7 years and Rs 900 crore over the first 15 years.

Over the first 3 years, GAIL expects incremental revenues of Rs 100-150 crore from the four city projects of Sonepat, Kota, Meerut and Dewas.

“We have already started distribution in Dewas (Madhya Pradesh)
in December. We will start Sonepat (Haryana) next month, Kota (Rajasthan) in July and Meerut (Uttar Pradesh) in October,” Ravindran, speaking on the sidelines of a seminar, said. The four cities are expected to consume about 4 million cubic metres of gas per day, the CEO said. Interestingly, the entire process of tender and award of the licences have been in effect quashed by the Delhi High Court in January this year on the basis of an affidavit by the petroleum ministry.

The ministry had said that the PNGRB, though designed to carry out such functions, did not actually have such powers.

According to the affidavit and subsequent High Court judgement, PNGRB will get such powers if and when the government notifies the corresponding law.

The court had also frozen the second round of bidding and awards for building such networks, which was then being conducted by the PNGRB.

The imbroglio is widely seen as a turf battle between the ministry, headed by Murli Deora and the Board, chaired by former petroleum secretary L Mansingh.

Last month, the Supreme Court allowed the Board to process applications for the second round, while sending notices to all concerned parties on an appeal against the High Court order by the Board.

The Board was in the middle of processing bids for the second round of city gas rollouts, involving the seven cities of Allahabad, Ghaziabad and Jhansi in Uttar Pradesh, Shahdol in Madhya Pradesh, Rajahmundry and Yanam in Andhra Pradesh and Chandigarh.

Ravindran did not comment on the legal aspects of the rollout but recent reports have suggested that the Deora is likely to abandon his plans to clip the wings of the Board by amending the current PNGRB Act., reportedly due to opposition from the finance ministry.