GAIL wants full ownership of Bengal Gas; state govt not keen

By: |
March 25, 2021 12:45 AM

BGCL plans to roll out 130 CNG stations and give piped gas connections to 12 lakh households in the next five years.

GAIL and GCGSCL had entered into a 74:26 JV in 2017 for the business of city gas distribution, but GCGSCL's cash constraints are said to be coming in the way of the project's progress.GAIL and GCGSCL had entered into a 74:26 JV in 2017 for the business of city gas distribution, but GCGSCL's cash constraints are said to be coming in the way of the project's progress.

GAIL India wants to buy out the entire 26% stake of Greater Calcutta Gas Supply Corporation (GCGSCL) in its joint venture, Bengal Gas Company (BGCL), to make it its own 100% subsidiary. However, the West Bengal government-owned GCGSCL is unwilling to transfer any share.

GAIL and GCGSCL had entered into a 74:26 JV in 2017 for the business of city gas distribution, but GCGSCL’s cash constraints are said to be coming in the way of the project’s progress.

A GAIL official told FE that BGCL has planned a capex of Rs 4,950 crore by FY24, to be funded at a debt-equity ratio of 60:40. This funding would require an equity infusion of Rs 1,980 crore, of which GCGSCL will be needed to pay Rs 150 crore. GCGSCL had agreed to pay part of the equity in cash and part in land parcels, but the land parcels which GCGSCL or the West Bengal government has so far identified have no title deeds.

The West Bengal government had wanted to sell off GCGSCL to GAIL way back in 2013, but GAIL had refused since GCGSCL had a negative net worth at the time. In 2017, both the companies formed a JV and incorporated BGCL for city gas distribution business, but now GAIL wants to be the sole distributor of it.

BGCL plans to roll out 130 CNG stations and give piped gas connections to 12 lakh households in the next five years.

Though a GCGSCL official pointed out that it took 23 years to give piped gas connection to 12 lakh households in Delhi, GAIL officials believe with gas available at Essar’s Raniganj fields in West Bengal and its plans to source gas from Dahej in Gujarat, rolling out CNG stations and distributing piped natural gas (PNG) to households could be faster in West Bengal.

BGCL has already signed MoUs with a number of housing projects for the supply of PNG and has also flagged off two CNG stations at Garia and New Town. The 1,836-km long Jagdishpur-Bokaro-Haldia-Dhamra pipeline has already reached beyond Durgapur and land for the pipeline has been acquired up to Mogra in Hooghly. “We are acquiring plots only to build sectionalisation valve stations at every 25-km interval for safety purposes. The land on which the pipeline will run is not being purchased and only a compensation and price for a season’s crop since cultivation would be possible on the pipeline laid land,” a GAIL official said. The official added that permission has already been obtained for laying the pipeline in the Kolkata Municipal Area and along the Kalyani Expressway.

As of now, compressed coal bed methane (C-CBM) is being brought in cascade trucks from Essar Oil & Gas Exploration & Production’s (EOGEPL) fields in Raniganj East for supplies to the newly flagged off CNG stations in Garia and New Town. EOGEPL CEO Santosh Chandra said EOGEPL would supply 3.5 lakh cubic metre per day for the coming six months, which will be taken up to 10 lakh cubic metre per day. EOGEPL’s hydrocarbon acreage has 348 wells and a resource base comprising CBM and shale gas of 15 trillion cubic feet.

Once the pipeline is commissioned up to Kolkata, it will come at a 65-80 kg pressure, which would gradually be reduced to less than 1 kg pressure when it reaches households as PNG. The CNG, at present, being sold from two stations are priced at Rs 67.70 a kg, BGCL official said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Covid-19 themed threats surge: McAfee sees cyber-attack detections increase by 114% in Q4 2020
2NCLT okays resolution plan for Balmer Lawrie JV company under IBC
3Insolvent Telecom Operators: Row over AGR dues back in Supreme Court