Date:18/02/2004 URL: http://www.thehindubusinessline.com/2004/02/18/stories/2004021801080200.htm

Back BPCL marks Rs 1,500 cr for expanding distribution

Archana Chaudhary

The company is in talks with Gujarat State Petronet Corporation for a joint venture in Gujarat.

Mumbai , Feb. 17

BPCL plans to invest nearly Rs 1,500 crore on expanding its natural gas distribution business. The oil major is setting up two joint ventures with Gail (India) Ltd for gas distribution in Pune and Kanpur, a senior official has said.

Bharat Petroleum already holds 45 per cent stake in a similar joint venture with Gail — Indraprastha Gas Ltd — for Delhi.

"We are looking at roughly the same spend on city gas distribution projects as we plan for exploration and production, which is Rs 1,500 crore. The memorandum of understanding for the two new joint venture companies with Gail is ready and should be made public soon," the official told Business Line.

The new joint venture companies will follow the same model as in Delhi, in which Gail and BPCL hold 45 per cent stake while the State Government holds 5 per cent.

Pune and Kanpur are among the 11 most polluted cities in India, in need of eco-friendly fuels such as CNG and piped gas. The Gas Linkage Committee, appointed by the Union Government, had estimated that Pune, with a population of 1.5 million, would need gas supplies of 0.4 million metric cubic metres per day while Kanpur's 1.68 million people would need 0.1 mmcmpd.

"Gail has trunk pipelines to reach the gas while BPCL has a strong retail network for transport fuels. So the synergies are strong. BPCL is serious about retailing natural gas," said the official who declined to be named.

The company has already tied up bulk customers for its 0.5-million-tonne share of gas imported by Petronet LNG at Dahej. BPCL is a 10 per cent partner in PLL.

"We have actually asked for a higher allocation of gas from PLL. Although there were apprehensions that the Indian consumer may not want to pay more for gas, we found that there are takers," the official said.

BPCL is now looking at city gas distribution projects in Ahmedabad, Mehsana and Sabarkanta in Gujarat. The company is in talks with Gujarat State Petronet Corporation for a joint venture in Gujarat. It also continues to be keen on Bangalore, he said.