RIL to acquire majority stake in Andhra gas distribution company | business | Hindustan Times
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RIL to acquire majority stake in Andhra gas distribution company

business Updated: Aug 04, 2009 22:51 IST
Ashok Das

Reliance Industries Limited (RIL) will acquire a majority stake (67 per cent) in the Krishna-Godavari Gas Network Limited (KGGNL), the Andhra Pradesh government owned corporate entity that is mandated to set up a gas distribution network across the state with an outlay of a whopping Rs 100000 crores.

The remaining 33 per cent stake in the newly floated company will be equally held by the Invest Corporation of Andhra Prudish (Incap), Gujarat State Petroleum Corporation and IDFC Private Equity Fund.

This was finalised at a high level meeting on the utilisation of KG Basin Gas chaired by Chief Minister YS Rajasekhar Reddy here this evening. "Our top most priority is to see that piped gas reaches every kitchen in the state," Reddy said.

RIL and other stakeholders will sign the shareholder's agreement with the state government next week, economic adviser to State Government DV Somayajulu said. Somayajulu said KGGNL would prepare a roadmap for the Gas Distribution network in the next fifteen days.

"For Hyderabad alone, the cost of building the CGD network will be over Rs 3,500 crore, while Rs one lakh crore is required for a similar network across the state," Somayajulu pointed out.

The new company will try to avoid duplication of CGD network that is already being planned by Bhagyanagar Gas Limited, a joint venture of ONGC and GAIL ,which has the mandate to distribute gas in the state capital, Hyderabad besides Vijayawada and Kakinada.

The RIL is presently supplying 10 million metric standard cubic metre per day (mmscmd) for projects in Andhra Pradesh which is the present requirement. The state is expecting the gas allocation to double to 24.21 mmscmd as gas production increases in KG Basin.