AG&P to pump in ~18K cr in city gas distribution

In talks with GAIL (India) for long-term supply to southern states

AG&P Pratham, an India arm of Singapore-based AG&P City Gas, is set to invest around ~18,000 crore in city gas distribution (CGD) over the next eight years.

The company is in talks with multiple suppliers —including GAIL India — for long-term natural gas supply deals for the southern states. The firm is developing 12 CGD networks in India, covering 34 districts.

Of the 12 geographical areas that the company has, five are in Karnataka, three in Tamil Nadu, two in Andhra Pradesh and one each in Kerala and Rajasthan.

“We are going to invest around ~3,000 crore during the current financial year and are planning to pump in around ~18,000 crore over a period of eight years,” said Chiradeep Datta, chief operating officer of AG&P Pratham.

Private equity major I Squared Capital had recently invested approximately $200 million in AG&P City Gas.

It is also in talks with state transport utilities in Kerala for running compressed natural gas (CNG) buses. According to sources, Kerala has already ordered 400 CNG buses to run in the Thiruvananthapuram area.

The company’s CGD networks will include 278,000 square km of land area, 17,000 inch-km of pipeline and over 1,500 new CNG stations.

For setting up the pipeline network itself, the investment is expected to be in the range of ~1,700 crore. AG&P had already committed an investment of around ~2,700 crore over the next eight years in Tamil Nadu to build city gas networks in the districts of Kanchipuram, Chengalpattu, Vellore, Ranipet, Thirupathur and Ramanathapuram.

“At present, administrative price mechanism (APM) gas is available only for transport and households. Anything that is being supplied to the industries and commercial establishments should be imported. For that, we are in talks with companies like GAIL for long-term supply of natural gas,” Datta added.

The company is also going to come up with seven liquid to compressed natural gas (LCNG) stations. He added that in areas with no pipeline network in place, it is using virtual pipelines to supply natural gas. This comes at a time when the country has given licenses under the 11th round of city gas distribution (CGD) bidding.

After the current round, 88 per cent of the country’s land area and nearly 98 per cent of its population will be covered by the city gas network. During the 11th round, the Petroleum and Natural Gas Regulatory Board (PNGRB) had offered five geographical areas (GAS), spread across 27 districts in five states. Seven companies had put in 21 bids for areas in states like Uttar Pradesh, Chhattisgarh, Bihar, Jharkhand, and West Bengal.

Following the bidding process, Hindustan Petroleum Corporation and Bharat Petroleum Corporation won two GAS each and one GA was won by GAIL.