GAIL India to expand in city gas distribution

GAIL (India), the country’s biggest gas marketing company, is looking to expand rapidly in areas of city gas distribution (CGD) and related pipeline infrastructure through tie-up with various state government entities. Having tied up with state entities in Karnataka and Kerala, the company is now looking to forge partnerships with state government entities in Rajasthan, Maharashtra, Andhra Pradesh, West Bengal, Orissa, and Tamil Nadu among others.

The central government company, though dominant in the gas marketing and pipeline business, has faced competition recently from the entry of new players. It also lost bids for few CGD and pipeline projects. “The involvement of state government entities gives us an edge because of their understanding of the industrial sector and its demand for gas. Moreover, the association of state utility gives us a commitment of off-take. It is a win-win situation for both the sides,” said a company official.

In Andhra Pradesh, GAIL is in advanced stage of signing agreement with the AP Gas Infrastructure Company. Similar exercise is on with the Rajasthan State Petroleum Corporation in Rajasthan and West Bengal Industrial Development Corporation in West Bengal.

Earlier this month, GAIL signed a joint venture (JV) agreement with the Karnataka State Industrial and Infrastructure Development Corporation to pursue various natural gas related business activities in the state. The JV will focus on setting up of natural gas infrastructure in industrial areas, CGD and trunk pipelines. In April, GAIL formed a JV with the Vadodara Mahanagar Sewa Sadan, an arm of the Vadodara Municipal Corporation for CGD in Vadodara and adjoining areas. While both the entities have been carrying out CGD business in Vadodara since last 20 years, the JV has been formalized to ensure a dedicated thrust for CGD business. In September 2009, GAIL signed a MoU with the Kerala State Industrial Development Corporation to develop natural gas distribution and CGD network.

GAIL is a major gas transmission, distribution, processing and marketing company in India and has diversified its operation in other integrated energy and petrochemical activities. The company owns and operates more than 8,600 km of gas pipeline with a capacity of transmission of 170 million standard cubic metres of gas per day.