The Hindu Business Line : RIL arm may take 67% stake in KG Gas Network

Hyderabad, Nov. 10 Reliance Gas Corporation Ltd, a subsidiary of Reliance Industries, has been invited to acquire 67 per cent stake in the Krishna Godavari Gas Network Ltd, a special purpose vehicle carved out for gas distribution through a pipeline grid.

With the restructuring of the SPV, the Reliance arm will have 67 per cent equity, Gujarat State Petroleum Corporation (GSPC), IDFC (private equity) and InCAP will have 11 per cent each. InCAP will hold stake on behalf of Andhra Pradesh Government.

Earlier, the SPV had equity holding of 26 per cent each for GSPC and InCAP and 48 per cent by IDFC (private equity). However, with no gas production in sight for this SPV, the AP Government has decided to invite Reliance into the venture.

With this restructure, the SPV, while enlisting the participation of Reliance firm, will submit bids to Petroleum and Natural Gas Regulatory Board (PNGRB) and seek nod for laying the city gas distribution network in the State.

Addressing a press conference here on Monday, the Andhra Pradesh Information Minister, Mr A. Ramnarayan Reddy, said that the State Cabinet on Monday approved 67 per cent stake for Reliance Gas in the SPV.

Reliance advantage

As per indications, gas from Reliance KG fields is likely to be distributed in the gas pipeline for major consumers early next year. However, the distribution network for gas in cities will take some more time, Mr Reddy said.

The PNGRB has received bids from Reliance Gas to lay city gas distribution network in Hyderabad, Kakinada, Tirupathi, Vijayawada and Rajahmundry.

The SPV was earlier formed by GSPC consortium for supply of natural gas. However, the gas from GSPC’s KG wells is likely only by 2011-12. Therefore, the State Government decided to bring about changes to expedite supply of gas from the Reliance fields in the KG basin.

Mobilising Resources

The State Government is of the view that the entry of Reliance as one of the promoters of KGGNL serves the main objective of gas supply. It felt this ensures supply of natural gas besides reducing the burden on other consortium members in mobilising resources for setting up of the gas network in cities and municipalities along the course of the main pipeline network.

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