All the required formalities have been completed for the launch a joint venture company between Vadodara Municipal Corporation (VMC) and GAIL India for supply of natural gas in the city and surrounding areas.
Talking to PTI here on Sunday, VMC Commissioner Ashwini Kumar gave this information and also expressed hope that the joint venture company would come into being in the next couple of months.
“The proposal of this joint venture company would come before the general body of the VMC on August 8. After getting approval from the elected members of the VMC, the Gujarat government as well as the the concerned central authorities, the joint venture company is expected to come into existence in the next couple of months,” he said.
“This proposed company aims at providing gas to the city and surrounding areas for the domestic, non-domestic and industrial purposes at present. It is mostly provided for domestic purposes,” Kumar added.
Once the new company comes into existence, it is expected to provide over 85,000 gas piped connections in the city, in addition to the existing 78,000 connections. GAIL presently has allocated one lakh cubic metres of gas for the city, which will be increased to provide more gas connections for domestic, non-domestic and industrial sector.
“It was a daunting task for us to complete all the formalities, keeping in mind the interest of VMC and people of the city,” Ashwini Kumar said.
VMC and GAIL had signed a formal agreement to this effect in New Delhi in April 2011, followed by signing of MoU between GAIL and VMC in Vadodara in October 2009.
According to Kumar, the new proposed JV company will have six directors, with three representatives each from VMC and GAIL.
The term of the managing director of the company will be on rotation basis for a two-year term, he said.
One of the issues that was coming in the formation of the company was related to shareholding pattern, Ashwini Kumar said. “As per the earlier proposal, it was proposed that 26 per cent of equity will be with GAIL, while 24 per cent will be held by VMC and remaining 50 per cent will be with the strategic partners and financial institutions,” Kumar said.
“However, it was not acceptable to us (VMC) and in the interest of civic body, we insisted on making changes. GAIL accepted our proposal for having equal stake in the equity,” he said.
Another factor for the delay in the formation of the company was related to the asset valuation of VMC gas project, which was done through a valuation firm, which took time to complete. “The assets of gas project of VMC will be transferred to new company. The assets of the VMC gas project are valued at Rs 107.2 crore, while those of the GAIL are valued at Rs 107.9 crore,” he said.
The VMC will pay an amount of Rs 63 lakh to GAIL for holding equal stake in equity, Kumar said.
In 1971, the VMC had taken a lead in the country to provide piped gas supply to the people. The project was launched by the late prime minister Indira Gandhi.
GAIL wants to develop this joint venture company to replicate the model in other parts of the country.
On October 1, 2009, the Energy and Petrochemical Department of the Gujarat government had decided to accord an in-principle approval to the proposed JVC between VMC and GAIL. This was for distribution of Natural gas in residential, commercial, industrial sectors and creation of infrastructure related to distribution of CNG within and around Vadodara, subject to several conditions.