Date:01/12/2004 URL: http://www.thehindubusinessline.com/2004/12/01/stories/2004120101960200.htm

Back GAIL in talks for stake in China Gas — Plans Rs 2,000 cr investments in Russia

Our Bureau

Mumbai , Nov. 30

GAIL (India) Ltd is in talks to buy minority stake in the Government-owned China Gas Holding Company for setting up city gas distribution grid in Beijing and other Chinese cities.

Mr Prashanto Banerjee, Chairman and Managing Director, GAIL India, told reporters today: " The Chinese Government is keen to replicate Delhi's success in using natural gas as a vehicular and domestic fuel in its cities - primarily Beijing, before the Olympics begin. GAIL has expertise in setting up city gas distribution grids in India and through three companies in Egypt."

The company may also sign agreements with four Russian organisations when the Russian President, Mr Vladimir Putin, visits India later this week. These include exploration and production company Lukoil, gas major Gazprom, pipelines company Stroygaz and the Skochinsky Institute of Mining (for lignite gasification). The company has already entered an agreement with Gazprom for working together in India and abroad, he said.

Mr Banerjee said GAIL plans to invest around Rs 2,000 crore on projects in Russia.

South India gas grid

GAIL will begin work on building a gas grid in South India to transport liquefied natural gas that will be imported at Petronet LNG Ltd's (PLL) proposed Kochi terminal. The company holds 12.5 per cent stake in PLL and sells 60 per cent of the 2.5 million tonnes natural gas it imported at its Dahej import terminal.

The first stretch of the proposed South India gas grid will be located in Kerala and will be synchronised with the commissioning of PLL's proposed 5-million-tonne Kochi terminal, he said. Mr Banerjee said GAIL would continue to push for setting up a national gas grid for India. GAIL had been nominated by the former NDA Government as the sole company to set up the grid in its national draft policy for pipelines. Other oil and gas companies, however, raised objections to the proposal.

Dabhol power project

The Government has asked NTPC, GAIL, SBI Caps and IDBI to complete and make operational the idle Dabhol power project by the third quarter of 2005-06.

``Each of one us have been given a definite role by the Government and it is for GAIL to make it operational once the LNG has been sourced at the right price,'' Mr Banerjee said.

GAIL is looking for concessions from the Government and is tying up for LNG for 10-12 year period, as foreign suppliers are not interested in supply for short period, he said, adding that the challenge is to source LNG at a right price.

Once the plant becomes operational with funds from the special purpose vehicle, there would be open bidding for operating the project and GAIL has formed a joint venture with Tata Power Company for it.