Adani plans to invest Rs 10,000 crore in city gas distribution networks

Adani Gas, the city gas distribution (CGD) arm of Adani Group, looks to invest close to Rs 10,000 crore in the 15 geographical areas (GA) it won in the ninth and 10th rounds of CGD bidding. The company also looks to advance work on the Gujarat and Rajasthan GAs.

“In the ninth and 10th rounds, we won 15 GAs. One of these — close to Faridabad — has already gone into operation. Another should get operational soon,” said Suresh Manglani, chief executive officer, Adani Gas.

The company added it has so far spent Rs 400 crore on these GAs and placed vendor orders. “Full investment in the GAs over eight years will be Rs 10,000 crore,” said Manglani, in a post-earnings media call on Wednesday evening.

For the April-June 2019 quarter, Adani Gas reported a profit after tax of Rs 79 crore, 43 per cent higher from the Rs 55 crore in the same quarter a year ago.

As part of the strategy, the company also looks to complete 50 kilometres (km) of pipeline network in the first year of the bid awards. “We will look to advance the pipeline laying in most of the GAs by four to five years, so we can monetise the GA earlier,” Manglani added.

Both the ninth and 10th rounds of city gas bids are expected to see around Rs 1.2 trillion investments in India by March 2029.

In addition, Adani will also look to focus on certain western regions. “Our main focus is early monetisation of the Gujarat GAs and we push for the Rajasthan GA, specifically Udaipur,” said Manglani.

In August 2018, the Petroleum and Natural Gas Regulatory Board issued a letter of intent to 18 successful bidders for 48 GAs. Adani Gas won 11 areas through joint ventures (JVs) and six single bids in the ninth round. In the 10th round, Adani Gas won two GAs and Indian Oil Corporation (IOC)-Adani Gas JV won an additional GA. Adani, along with its JV partner IOC, is authorised to distribute gas in 38 GAs and is currently operating a CGD network in 13 locations together with IOC.

The company is confident that gas-pricing changes will not be a concern for its operations. “There is a well-laid-out government policy for administrative price mechanism gas and that has been formulated very well,” said Manglani. He added, “For compressed natural gas (CNG), we source gas from very competitive sources, through a mix of one-year contracts and spots. We look to continue with the same strategy for gas sourcing.”

With the completion of the 10th CGD bidding round, CGD would be available in 228 GAs comprising 402 districts spread over all the states and Union territories, covering approximately 70 per cent of India’s population and 53 per cent of its geographical area.

According to the commitment made by various companies during the 10th round, 20,292,760 domestic piped natural gas connections and 3,578 CNG stations for the transport sector would be installed largely during a period of eight years up to March 2029, in addition to the 58,177 inch-km of steel pipeline.

With inputs from Shine Jacob