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| CGD projects to source natural gas from PMT fields |
| Kalpana Pathak / Mumbai May 07, 2009, 01:07 IST |
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Three companies — DSM Infratech, Gail Gas and Bhagyanagar Gas — that recently bagged the right to lay city gas distribution (CGD) networks in six cities, are looking at sourcing natural gas from Petronet LNG and Panna-Mukta-Tapti (PMT) fields. This would be in addition to what they would be allocated from Reliance Industries’ blocks in the Krishna-Godavari (K-G) basin.
The Petroleum and Natural Gas Regulatory Board (PNGRB) says these companies will have to secure gas supply contracts within three months of winning the contract bid.
“The K-G basin gas can be used only for the automobile and domestic segments. We would have to look at alternative supply sources like Petronet LNG and PMT fields for industrial users. Besides, the 5 standard cubic metre per day (mscmd) allocated from the K-G basin to the city gas distribution will partly be consumed by the existing networks. There would hardly be sufficient supply for the other players to meet the demand,” said a senior official from Gail Gas, a unit of Gail India.
He added that the company was also banking on Gail’s network for sourcing gas.
Gail Gas has won bids for four cities — Devas (Madhya Pradesh), Kota (Rajasthan), Meerut (Uttar Pradesh) and Sonepat (Haryana). The company will invest around Rs 300 crore in the initial stage that would be funded through internal accruals by Gail India.
“We will be looking at investing around Rs 500 crore at a later stage where we will raise funds from banks and financial institutions,” said the official.
DSM Infratech, a real estate player, bagged the bid for Mathura (Uttar Pradesh) city. “Mathura had received only one bid from Gail Gas. The PNGRB decided to extend the timeline by a month in the absence of enough bids for Mathura. Later, we too, submitted the proposal and won the bid,” said a senior official from DSM Infratech.
DSM Infratech also plans to source gas from Petronet LNG and PMT fields. “We would soon be talking to these players for gas supply,” he added. DSM plans to invest around Rs 200 crore in the initial stage of the project with a debt equity ratio of 60:40.
Bhagyanagar Gas Ltd (BGL), an equal joint venture between Gail and HPCL, bagged the bid to lay city gas network for Kakinada (Andhra Pradesh), outbidding Reliance Gas.
Other companies that participated in the first round of bids, include Gujarat State Petroleum Corporation (GSPC) Gas Company, Reliance Gas, Bharat Petroleum Corporation (BPCL) and Indraprastha Gas Ltd (IGL). Indian Oil Corporation formed a joint venture with Adani Energy to bid for CGD network.
Sector analysts say that the CGD sector in India currently consumes 5-6 per cent of the total available gas, or 5-6 million mscmd, but the consumption is set to quadruple in a few years.
“The companies should tap whichever source of gas supply is available to them. Higher gas volume will always help meet the demand,” said a senior PNGRB member.
The PNGRB expects the city gas distribution network to spread to 100 cities by the end of the Eleventh Five-Year Plan (2012). Currently, around 10 cities have piped gas networks for domestic use.
The PNGRB has already invited expression of interests for seven more cities — Allahabad, Ghaziabad, Jhansi, Rajahmundry, Shahdol, Yanam and Chandigarh — and hopes to finalise the winning bidders by June.
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