GAIL to invest Rs 5,000 cr in CNG corridor

State-run gas utility GAIL India Ltd will invest Rs 5,000 crore over the next 3-4 years to set up a CNG corridor across the country, company Chairman U.D. Choubey said today.

"We have identified 230 cities for retailing compressed natural gas (CNG) to automobiles and pipe cooking gas to households," he said.

GAIL, a pioneer in city gas business in India, will use its experience and technical expertise to wrest most of the cities when they are put on auction by the oil regulator Petroleum and Natural Gas Regulatory Board.

PNGRB has currently offered only six cities - Meerut and Mathura in Uttar Pradesh, Kakinada in Andhra Pradesh, Sonepat in Haryana and Dewas and Kota in Madhya Pradesh, for bidding in first phase. GAIL is likely to bid for all of these cities.

Choubey said a wholly-owned subsidiary, GAIL Gas Ltd, has been set up for pursuing city gas opportunities. GAIL has initially pumped in Rs 200 crore as equity in GGL, while another Rs 300 crore has been arranged as debt.

"During the recent strike in the oil sector, CNG retail stations were the least affected," he said. CNG is not only environment friendly but also cheaper than petrol and diesel.

The subsidiary would also help GAIL in complying with the requirement of unbundling its gas transportation and marketing business into separate units.

The new subsidiary would also take up the CNG Corridor Project that involves an estimated capital outlay of Rs 35 crore for setting up CNG stations along the highways.

GAIL has identified 230 cities contiguous to existing and proposed pipelines for City Gas Distribution in phased manner.