The Hindu Business Line : GAIL to buy bottling units from pvt LPG cos

GAIL (India) Ltd plans to buy bottling capacities from private cooking gas marketing companies for its planned entry in cooking gas distribution by April next year.

The company received the Government's official go-ahead to enter retail cooking gas distribution on February 1 and has started looking for buying out the existing bottling units, Mr Prashanto Banerjee, Chairman and Managing Director, said.

Major private sector LPG players include Bharat Shell Ltd, Caltex SPIC India Ltd, Elf Gas India Ltd, Hindustan Aegis LPG Bottling Co Ltd, Mobil Peevees Co Ltd and SHV Energy India Ltd.

GAIL produces 1.1 million tonnes or almost 18 per cent of India's cooking gas or liquefied petroleum gas (LPG). The company is eyeing units set up by small private sector players, also known as parallel LPG marketers, which have been incurring losses in the distribution business dominated by large state-owned companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum Corporation. Currently, GAIL sells its entire LPG production to these three companies.

The company may also "outsource" cooking gas from the parallel marketers, Mr Banerjee said.

If GAIL decides to set up its own production units, it would need investments of close to Rs 1,500 crore for setting up a dozen such LPG extraction plants, he said.

GAIL also plans to set up an LPG extraction unit in Myanmar, close to its current gas find. The company plans to ship close to 2,50,000-tonne LPG each year from the proposed Myanmar plant to Haldia or Vizag ports.

It is in the process of picking up 10 per cent stake in China Gas Company and evaluating an exploration block offered by Gazprom in Australia.

The commercial production from its block in Myanmar is expected to commence from 2008. The company is looking to enter the gas futures business and has been approached by MCX and it is also considering a separate trading desk. GAIL has a capacity expenditure plan of Rs 3,000 crore during the current fiscal, which would be hiked to Rs 4,500 crore by the next financial year, Mr Banerjee said.

Indian Oil, Chennai Petroleum and GAIL have reached an understanding on partnering the proposed five-million-tonne Ennore natural gas import terminal, Mr Banerjee said. The companies will take investment decisions only after the feasibility study for the project is submitted by this year-end.

Dabhol project revival

MR Banerjee said GAIL and NTPC would be part of a special purpose vehicle to restart the 2,184-MW Dabhol power project and LNG terminal.

Both the companies would bring in Rs 500 crore each for the revival. But the decision would depend on the lenders reaching an agreement with Dabhol's present promoters GE and Bechtel and foreign lenders, he said.

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