The oil PSUs, after a recent meeting with the chief secretary of the Maharashtra government, have agreed to provide space (500 sq m) at their retail outlets to Mahanagar Gas to expand its CNG business With the oil companies giving the go-ahead, MGL will now increase the number of outlets to 35 from the present sixteen, said a top Mahanagar Gas official.

MGL is selling around 52,000kg of CNG through its 16 retail outlets in Mumbai. The move to increase the number of outlets is part of the company's efforts to cash in on the rising demand for the product. At present, 1,200 vehicles run on CNG which include mostly taxis, the official added. The Maharashtra government itself ispromoting the use of CNG in Mumbai due to a thinking that it would considerably curb pollution.

The company's expansion plans were in limbo after the state government insisted on a rental charge of Rs 4,800 per sqm higher than Rs 3,000 per sqm, the amount arrived at through valuation done in 1991.

The state chief secretary has asked the revenue department officials to bring down the rental charges to original levels, sources said.

The government went for the higher revision of amount soon after Mahanagar Gas was constituted in 1995. The land was given to Mahanagar Gas through the bifurcation of the entire property measuring 2.8 hectares owned by co-promoter Gail. The property was originally allocated to Gail for a gas distribution project in Mumbai.