New Delhi: GAIL India will set up a separate subsidiary for sale of CNG to automobiles and piped gas to households and has identified 17 cities for such projects, which would entail an investment of Rs500 crore.
The yet-to-be-named company will have an equity of Rs200 crore and borrow another Rs300 crore for the projects, said company chairman U D Choubey on Tuesday.
“The setting up of the subsidiary will also help in part for compliance of requirement of unbundling of the business for GAIL which may come in future,” he added.
The subsidiary company will take up Distribution and Marketing of CNG as fuel for vehicles (inter-city as well as intra-city), Piped Natural Gas for domestic/ commercial/ industrial purposes and Auto LPG as fuel for transport vehicles in various cities in India and abroad.
The subsidiary company will also take up investment in and setting up of infrastructure in various cities of India and along the national highways for building CNG corridors which includes, among others, natural gas compressor stations, laying of the pipelines from City Gate Station(s) to the consumption areas and associated facilities, setting up of distribution points / retail outlets for CNG/ Auto LPG and transport gas through mobile cascades/ lorries.
The new subsidiary will also carry out allied retail business activities at CNG / Auto LPG retail outlets within the cities and along the highways.
The subsidiary will also form alliances with Gas Producers/ Strategic Partners for implementation of the City Gas Projects as per the strategic decisions taken by GAIL.
He said the existing joint venture companies would continue to operate the way they are doing at present. However, GAIL will have the option to transfer its shares in the existing City Gas Distribution Joint Venture Companies as also the assets in Agra Ferozabad Local Distribution Network to the subsidiary company.
GAIL has identified 230 cities contiguous to existing and proposed pipelines for City Gas Distribution in phased manner.
In the first phase, 17 cities have been identified to be taken up through its subsidiary company with authorization from Petroleum and Natural Gas Regulatory Board (PNGRB).
The subsidiary company would take up directly with PNGRB towards the authorization and execution of CGD projects throughout India.
The subsidiary will have the distinct advantage of access to GAIL’s existing network of over 6,700 km and proposed network of around 5,500 km across the country.
This will help in spreading the economic and environmental benefits of clean fuel like natural gas to distant parts of the country and help in achieving the objective of inclusive growth.