IFC to invest $25 mn in Bhagyanagar Gas

International Finance Corporation (IFC) would make an equity investment of $ 25 million (around Rs 115 crore) in Bhagyanagar Gas Limited (BGL), a company floated by HPCL and GAIL for setting up city gas distribution (CGD) projects in Andhra Pradesh.

The proposed investment would support BGL's capital expenditure of $276 million (around Rs 1,270 crore) to create gas distribution infrastructure in the major cities of the state.

BGL's proposed investment include laying of pipe, operate and maintain its own gas distribution pipeline and as well as retail outlets for Compressed Natural Gas (CNG). The company has been mandated to distribute and natural gas for use in residential, commercial, industrial and automotive sectors.

According to BGL, the infrastructure will be created in the cities of Hyderabad, Vijayawada and Kakinada. The major costs of expansion are steel pipelines, polyethylene pipelines, valves, meters, regulators and filters.

The project is expected reduce air pollution levels in crowded cities by reducing vehicular emissions (particulates, sulfur dioxide, nitrous oxides) through a shift towards usage of natural gas as automotive fuel, as well as lessening GHG emissions.

Generation of financial savings for end-consumers through expanded use of CNG rather than more expensive diesel oil and petrol fuels which are imported at international prices, provision of a reliable on-tap energy source for households, displacing bottled LPG which is inconvenient to handle with long waiting times for refill, according to the project report.