India: GAIL Gas, APGIC and APGDC Sign Deal for Gas Distribution in Andhra Pradesh

GAIL Gas Limited, a wholly owned subsidiary of Navratna company GAIL (India) Limited, signed a Share Holders Agreement (SHA) with Andhra Pradesh Gas Infrastructure Corporation Limited (APGIC) and Andhra Pradesh Gas Distribution Corporation Limited (APGDC) Friday for restructuring of APGDC which will pursue city gas distribution opportunities in the state.

The SHA was signed in the presence of Shri Sutirtha Bhattacharya IAS, Principal Secretary to Govt. of Andhra Pradesh (Infrastructure & Investment Dept.), Shri B. R. Meena IAS, Vice Chairman and Managing Director, AP Industrial Infrastructure Corporation Ltd. and MD, APGIC, Sri Vijayanand IAS, MD, AP Power Generation Corporation Ltd. and Shri Prabhat Singh, Director (Marketing), GAIL by Shri M. Ravindran, CEO, GAIL Gas, Shri C. Radhakrishna, Director (Projects), APGENCO representing APGIC and Shri V. Srinivasulu, Executive Director, APGIC representing APGDC.

APGDC was incorporated earlier this year as a wholly owned subsidiary of APGIC with an authorized share capital of Rs. 100 crore for laying and maintaining natural gas pipeline infrastructure and city gas distribution (CGD) networks in the state. Keeping in view the experience of GAIL Gas in implementing CGD projects, the Andhra Pradesh Government gave the nod for equity participation of GAIL Gas in APGDC to tap the huge potential of the natural gas business so as to accelerate the industrial growth in the state.

With the signing of the SHA, GAIL Gas and APGIC will hold 25 per cent equity each in the company. The balance 50 per cent equity has been kept for strategic partners, financial institutions and other private/public participants. After the restructuring of APGDC, the Chairman of the company will be from APGIC and the Managing Director from GAIL Gas.

The company plans to make use of the abundant natural gas resources available in the Krishna Godavari Basin and to create the necessary CGD infrastructure to utilize these resources for the benefit of industry, transport and domestic sector in state.

The scope of business of the company includes creating natural gas infrastructure in industrial estates, areas and clusters, developing distribution infrastructure downstream of trunk lines, promoting natural gas applications in various sectors and setting up City Gas Distribution networks to supply environment friendly, economical and convenient fuel compressed natural gas (CNG) to vehicles and piped natural gas (PNG) to households, commercial establishments and industries.

Speaking on the occasion, the officials highlighted the geographical advantage of Andhra Pradesh because of its proximity to the KG Basin blocks and Kakinada which are evolving as the hub of the pipeline network running across India. The importance of the Kakinada – Srikakulam and Kakinada – Nellore pipelines and the need to set up a RLNG terminal on the east coast, particularly on the Kakinada-Vishakapatnam stretch, so as to ensure continuous gas availability in the state also figured in their discussions.

APGDC plans to take up city gas distribution activities throughout the state by participating in the bidding process of Petroleum and Natural Gas Regulatory Board (PNGRB), including for Rangareddy-Medak, Nalgonda and Khammam districts for which bids have been invited in the fourth round.

GAIL (India) Limited presently has pipeline networks in Rajamundry and Kovvuru areas in the state. It proposes to develop other pipeline networks in Andhra Pradesh in the future.

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Source: GAIL, September 10, 2011;