India: GAIL Gas, KSIDC Sign Deal to Set Up JV in Kerala

GAIL Gas Limited, a wholly owned subsidiary of Navratna company GAIL (India) Limited, and Kerala State Industrial Development Corporation (KSIDC) signed a share holders agreement (SHA) on September 2, 2011, in the presence of Hon’ble Chief Minister Shri Oommen Chandy and GAIL Chairman and Managing Director Shri B. C. Tripathi to set up a joint venture Kerala GAIL Gas Limited to pursue city gas distribution opportunities in the state.

The SHA was signed by Shri M. Ravindran, CEO, GAIL Gas and Shri Alkesh Kumar Sharma, IAS, MD, KSIDC in Thiruvananthapuram.

GAIL (India) Limited is developing the Natural Gas Infrastructure in Kerala in view of the impending availability of Natural Gas in the state. It is laying the Kochi-Koottanad-Bangalore-Mangalore Pipeline which is passing through the states of Kerala, Karnataka and Tamilnadu. GAIL is working expeditiously to complete the first phase of Pipeline, 50 km. in length, by August 2012 in sync with the completion of PLL Terminal at Kochi.

In the second phase 720 km. of Pipeline will be laid which will be completed by March 2013. The cost of laying the above pipelines will be around Rs. 3100 crore. In Kerala, the Pipeline being laid by GAIL will pass through the districts of Ernakulam, Thrissur, Palakkad, Mallapuram, Kozhikode, Kannur, Kayamkulam and Kasargod which will lead to the Industrial and economic development of the state.

The Joint Venture company, Kerala GAIL Gas Limited, will be incorporated soon and will have an initial authorized share capital of Rs. 100 crore. GAIL Gas Limited will hold 26 per cent equity in the company while KSIDC will have 24 per cent. The balance 50 per cent equity has been kept for strategic partners, financial institutions (Indian or international) and non-Government companies.

Kerala GAIL Gas Limited plans to take up city gas distribution activities throughout the state by participating in the bidding process of Petroleum and Natural Gas Regulatory Board (PNGRB). There are 14 Geographical Areas (GAs) in Kerala, each district being considered as one GA. The company intends to supply environment friendly, economical and convenient fuel compressed natural gas (CNG) to vehicles and piped natural gas (PNG) to households, commercial establishments and industries.

Detailed feasibility report (DFR) and business plans for Ernakulum and Kozhikode have already been prepared to bid for these two geographical areas (GAs) for which bids are to be submitted shortly to PNGRB. Subsequently, the company will prepare business plans for the balance 12 GAs.

Kerala GAIL Gas also plans to set up CNG stations at bus depots of Kerala State Road Transport Corporation (KSRTC) and supply natural gas to power plants, cold storage units, wind power plants, etc.

The company is likely to have a capex investment of the order of Rs 250 crore by its fifth year and Rs 1,000 crore by the 25th year.

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Source: GAIL, September 2, 2011;