GAIL to invest Rs.20,000 crore on pipeline network in south India

GAIL, along with its partners, also plan to pump in Rs.3,000 crore to augment city gas distribution network


GAIL is also building a 1,104km gas pipeline that will traverse Kochi, Koottanad, Bengaluru and Mangaluru. Photo: Pradeep Gaur/Mint
GAIL is also building a 1,104km gas pipeline that will traverse Kochi, Koottanad, Bengaluru and Mangaluru. Photo: Pradeep Gaur/Mint

Mumbai: GAIL (India) Ltd, the country’s largest gas transmission and marketing company, will invest around Rs.20,000 crore over the next five-six years to build a gas pipeline network in south India.

B.C. Tripathi, chairman and managing director, said the company would, along with its partners, also pump in Rs.3,000 crore to augment the city gas distribution network.

GAIL sold a 12.5% stake in Mahanagar Gas Ltd (MGL) in the latter’s initial public offering (IPO), reducing its holding to 32.5%.

“The proceeds from the IPO will go into the central account of GAIL and will be used in expansion of our businesses,” Tripathi said at MGL’s listing ceremony. “We have a city gas distribution in Bangalore where we will need to make investments. There is huge investment happening in Bangalore. Haridwar and Goa are new areas that have been authorized to us. These areas will see investment.”

GAIL is also building a 1,104km gas pipeline that will traverse across Kochi, Koottanad, Bangalore and Mangalore.

GAIL’s concern has been about finding major anchor customers for gas in the region.

“At least 40-50% of the pipeline’s capacity will need anchor customers like the fertilizer plants at Gorakhpur, Durgapur, Barauni, etc. Also, the refinery at Barauni and Mangalore Refinery and Petrochemicals Ltd will provide support for pipeline from Kochi to Mangalore. This has been our basic concern with the government,” said Tripathi.

Other than MGL, GAIL has joint ventures with five more city gas distribution companies including Aavantika Gas Ltd, Bhagyanagar Gas Ltd, Central UP Gas Ltd, Green Gas Ltd and Indraprastha Gas Ltd. GAIL also operates through its own wholly owned subsidiary GAIL Gas Ltd.

GAIL and its joint venture partners are pushing for the use of natural gas in all the cities they operate in.

GAIL India shares rose 2.61% to Rs.395.25 on BSE on Friday, a day the benchmark Sensex gained 0.54%, or 145.19 points, to 27,144.91.

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