GAIL Gas to take up city gas distribution projects

New Delhi: GAIL (India) Ltd said that its recently floated 100 per cent subsidiary GAIL Gas Ltd will take up city gas distribution (CGD) projects in 17 cities in the first phase.
GAIL has identified 230 cities for CGD distribution in phased manner.

In a statement issued here after the first board meeting of the subsidiary, the company said, “In first phase, 17 cities have been identified to be taken up through its subsidiary company with authorisation from Petroleum and Natural Gas Regulatory Board (PNGRB). GAIL Gas would take up directly with PNGRB towards the authorisation and execution of CGD projects throughout India”.

The subsidiary company was registered last week as a limited company with an initial equity of Rs 200 crore. Corresponding to this equity amount, debt shall be arranged amounting to Rs 300 crore (considering 1.5:1 Debt: Equity ratio), the statement said. The business plan of GAIL Gas will be developed and presented to the board in three months, it said.

GAIL Gas will also take up the compressed natural gas (CNG) corridor project which involves an estimated capital outlay of Rs 35 crore for setting up CNG stations along the highways.

The new company could act as the funnel for re-investing returns from operational CGD projects into new projects, thus, reducing the need for fresh equity infusions by GAIL, the statement said.

“It is expected that the subsidiary company would be more easily listed in future to provide further upside as well as liquidity to GAIL,” it added.

The subsidiary company will have a board of directors consisting of not less than four and not more than 12 directors. The board shall initially comprise five directors including the Managing Director, and shall be appointed by GAIL.